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These Canadian directors and a top executive at the CU are responding to provincial and federal regulation affecting CUs.
This is bonus coverage from “Chief Executive, Chief Advocate” in the March 2014 issue of CUES’ Credit Union Management magazine.
Edmonton, Alberta-based Servus Credit Union’s board may take the CU’s political involvement as a given, simply because the board members themselves are particularly politically savvy.
For instance, one of the long-serving directors was a city councilor in St. Albert for three terms. Even more impressive, former Chair Peter Elzinga spent eight years as a member of the Alberta Legislature and held a number of Alberta ministerial positions, including serving as the minister of economic development and trade. He was appointed deputy premier and minister of federal and intergovernmental affairs and minister responsible for government from 1992 to 1993.
Before his election to the provincial legislature, Elzinga served 12 years as a member of the Parliament of Canada.
That political awareness is important because in Canada, the nature of credit unions’ political relationships has been changing in the past couple of years—and it was complicated for Servus CU, even before that.
CUES member Taras Nohas, the CU’s VP/strategy and governance at the 103-branch, province-wide credit union, explains that the situation in the province of Alberta is thorny. That’s because the province owns and regulates a financial institution, Alberta Treasury Branches, which has 309 branches and agencies.
At the same time, Alberta regulates provincially incorporated credit unions, and backs them with a 100 percent deposit guarantee.
“Our main task is to make sure it’s a level playing field,” Nohas says. “This work has been going on for years.
“We stay in touch with the [provincial] government. We stay on their radar.”
In the past, when Canadian CUs could only be incorporated by their provinces and operate within that province’s borders, there were few federal concerns for $13 billion, 390,000-member Servus CU. That changed in December 2012, when new legislation set up the option of a federal charter that would allow nationwide operation.
No credit union has made the switch as yet, but at least a couple are expected to do so in the near future. While Servus CU isn’t one of them, the CU is tracking federal regulation as it applies to credit unions much more closely.
“We feel there’s still a lot of market share here in Alberta,” Nohas says. “For the next several years, we’ll stick to our knitting and learn more about the requirements of the federal legislation.”
Once a credit union goes federal, it faces federal regulations, and becomes ineligible for the 100 percent provincial deposit guarantee. Servus CU needs to analyze all this further, Nohas adds.
In addition, the Canadian government announced on March 21, 2013, that it will increase income taxes paid by credit unions by eliminating a small business tax credit, for which CUs were eligible, over the next five years. Servus CU, along with other credit unions from across the country, is working with Credit Union Central of Canada to eliminate the tax change and minimize its impact on all credit unions. Most smaller credit unions will be significantly affected by the change.
“We’re meeting with members of Parliament on the issue,” Nohas says.
With the taxation question and the advent of federal credit unions, Servus CU and others in Canada now must keep a sharp eye on the federal government—just like American credit unions do. Having its board well-versed in advocacy—and a top executive charged with following the changes—will boost its efforts in this area.
Charlene Komar Storey is a veteran CU writer based in New Jersey.
