AUCKLAND, New Zealand–In a rare twist, a credit union here has purchased this country’s credit union trade association.
Credit Union Baywide, New Zealand's biggest credit union, has acquired Co-op Money NZ, the industry association that has been “struggling” according to Interest.co.nz.
Credit Union Baywide said Co-op Money NZ will become part of its organization but will retain its name and operational structure. Credit Union Baywide has also recently acquired a number of other credit unions, including NZCU South, NZCU Central and Aotearoa Credit Union.
According to Interest.co.nz, Baywide has already loaned Co-op Money NZ as much as $4.05 million.
Co-op Money is the brand used by what is officially the New Zealand Association of Credit Unions, which acts as not just a traditional trade group by U.S. standards, but which also provides core banking, payments and other services to some CUs.
Co-op Money reported losses of $1.369 million through June, according to Interest.co.nz and has sold its from insurance business to Provident Insurance Corp., and its life insurance business to Pinnacle Life. The group also recorded losses during the two prior years.
CU Reports Losses
Meanwhile, for its June financial year, Baywide lost $1.735 million versus a profit of $1.009 million the previous year, and in July decided to reduce, or impair, the value of its Co-op Money base capital notes to reflect the weakened financial position of Co-op Money NZ, and the impact of the four-way merger on some of its valuation assumptions, the publication reported. The base capital notes were impaired by 60%, meaning Baywide accounts for them at 40 cents for every dollar of the unimpaired value, the report added.
"Following this assessment, we have reduced the value of our Base Capital Notes to $2.90 million. This has resulted in a negative impact on our profit and loss for the financial year ended 30 June 2019, however it does not affect our regulatory capital ratio," Credit Union Baywide said in a statement quoted by Interest.co.nz.
Co-op Money NZ provides Baywide, NZCU Auckland, NZCU Employees, NZCU Steelsands, Firefighters and Fisher & Paykel credit unions with core banking, card and payments services, Interest.co.nz stated.
Those credit unions, along with non-credit union customers, will continue to take Co-op Money NZ's services.
Achieving ‘Agility’
“Our sector is an incredibly important part of New Zealand’s financial heritage. Just like any other part of the financial sector, it’s constantly under pressure to evolve, adapt and be more efficient,” Baywide CU CEO Gain Earle told Interest.co.nz. “This acquisition helps us do this while also achieving more agility to respond to customer needs – we have to be the absolute best we can be at serving our member-owners. As the largest New Zealand credit union we are in a strong position to achieve this outcome."
Baywide has more than $500 million in assets, 60,000 members, and about 300 staff.