Abacus asks: why buy what you already own?

The demutualisation of Goldfields Credit Union will be the third in a decade.

Statewest Credit Society, which listed through the Home Building Society in 2006 and disappeared into the innards of Bank of Queensland two years later, was the first to distribute members' capital in the form of listed shares.

MyState Financial in Tasmania followed suit, in 2009, and remains independent.

Goldfields Credit Union members will be throwing their equity in with investors found by Patersons.

The Patersons and Goldfields pitch is that a member's current equity "could be valued in the vicinity of $2000 per member."

The announcement yesterday offered no rationale for this valuation however.

The executive picked to run Goldfields for Patersons is Greg Wall, the CEO of Statewest at the time of demutualisation.

But voices are being raised against the plan.

Louise Petschler, chief executive of mutuals lobby Abacus wrote in an email that "our position is always that members own credit unions, and provided they get a fair deal and all the information, it's up to them to decide the future of their institution.

"We also hold that mutuals offer better value to their customers than listed banking institutions - something the CBA has helped us prove this week.
 
"GCU is a great community credit union and has delivered for its members and community. We have confidence in the members' judgement about its future, and we'll be doing our part to make sure they have all the information they need in making that choice."

Petschler noted that "this is an unusual transaction and it has a lot of WA-specific drivers.

"Abacus as the industry body will be keen to make sure the credit union members are getting a fair deal in terms of value.

"Are those shares worth $2000, are members being asked to 'buy' a premium for the ADI licence they already own?

"Is it a stockbroking firm buying an ADI licence? Those are important questions that will be answered in the next stages of detailed disclosure.
 
"Of course we trust that the board of GCU has gone through all these issues [and taken them] into account, so we'll see clear answers in the next stages.
 
"Once you give up a credit union structure, you never get it back."

Petschler concluded her email: "But these decisions are for the members to make, and over the past 30 years it is GCU's members who've earned the right to make it by building a great community banking institution."