Egged on by Treasurer Wayne Swan, Credit Union Australia (CUA) is making a big push to become the fifth pillar in Australian banking, with struggling credit unions a prime target for expansion.

CUA has already merged with two Victorian-based credit unions without a hitch. But its next target — Maleny Credit Union (MCU) in Queensland — has all the hallmarks of a bruising battle.

Anyone that followed Woolworths’ long struggle to plonk a supermarket next to a platypus habitat won’t be surprised at the strength of local opposition, although this is a very different campaign.

Whereas Woolies was a giant corporation riding into a town dependent on small retailers, this is a fight between a board and some of the members it represents.

Anti-merger protesters have posted a YouTube video, are organising through Facebook and are currently attempting to mail MCU members with the case for a “no” vote, although their efforts have yet to produce much success.

Last Monday Jan Duffield, while helping to man an information stall outside MCU, was asked by the local police to move on. Later, officials from the local council turned up.

Meanwhile Crikey understands that while the MCU advertises the benefits of the merger in the local paper each week, the letter the Friends of Maleny Credit Union wishes to mail to all members arguing against the merger has come back from the MCU’s solicitor about 10 times.

The board’s argument is that MCU suffers from a weakening capital position and growing compliance, governance and management costs, hence the need for a merger. But MCU’s previous annual reports make no reference to these burdens.

In fact, according to the 2009 annual report, MCU increased net profit by 11.2%, assets grew by 21% and it gave almost $23,000 to community groups.

A year later net profit was up 18% and MCU found the money to renovate its premises, introduce a new computer system and open a sub-branch in Woodford. It also grew membership by 13% and started a new financial services division. It doesn’t sound like a struggling business.

So why the need for a merger?

Well, this isn’t really a merger at all. The information document accompanying the special general meeting notice calls it a “proposed transfer of business.” That’s a more accurate description. CUA takes over a $47 million loan book and a building in the centre of town that’s valued at about $1.3 million.

And how much is CUA paying for these assets? Zippo. As a CUA spokesperson said, “CUA today is an amalgamation of over 160 mergers dating back to the 1940s. Each and every one of those transactions has been a transfer of business.”

In an interview with The Hinterland Times MCU CEO Greg Stevens says that, “There is no suggestion that MCU cannot sustain itself as a credit union.” But he goes on to explain that “the board was of the unanimous view that there was not a sustainable financial future for MCU Ltd that would provide reasonable and competitive benefits to its members”.

That qualification regarding benefits to members is absent from the message that clients see when they log in to the MCU website.

But it seems the hostility to the deal is not isolated to some irate members.

Lynne Frederiksen, an MCU board member of eight years, resigned last week saying, “In recent times it has been increasingly difficult for me to perform my role as director effectively in light of the changing direction of MCU without compromising my own values and ethics … the proposed merger and means to implement it, do not agree with my philosophy of what the Maleny Credit Union used to stand for.”

In a letter to the editor of The Range News Maleny, Frederiksen wrote: “Some of the actions that MCU has taken against the members who have expressed disagreement with the proposed merger, led me to my decision to resign from the board.”

Stephen Alexander, one of the organisers of the “no” campaign believes the tide is turning. “When we started, I’d say 60% of members were in favour of the merger and 40% against. Now I’d guess those figures have reversed.”

Greg Stevens takes the opposing view: “There is certainly a strong sentiment in favour of the merger and we are confident that the majority of our members will vote ‘for’ the merger.”

The special general meeting takes place on June 25, with 75% of members required to vote “yes” for the merger to proceed. It should be an interesting meeting.

*Disclosure: John Addis has a mortgage with CUA.

Peter Fray

Fetch your first 12 weeks for $12

Here at Crikey, we saw a mighty surge in subscribers throughout 2020. Your support has been nothing short of amazing — we couldn’t have got through this year like no other without you, our readers.

If you haven’t joined us yet, fetch your first 12 weeks for $12 and start 2021 with the journalism you need to navigate whatever lies ahead.

Peter Fray
Editor-in-chief of Crikey

JOIN NOW