Maleny CU in need of capital and directors
The proposed merger of MCU Ltd in Maleny with Credit Union Australia will not go ahead after a local campaign rallied members to block the plan.
Proxy votes closed yesterday morning for a Special General Meeting that will be held in Maleny tomorrow. While the exact number of proxy votes isn't known, there is no prospect that even a large turn-out of members at the SGM will be sufficient to deliver the votes to approve the merger.
More likely than not those campaigning against the merger will have ample support at the SGM as well, so the meeting may instead prove an opportunity to reflect on the myriad business and regulatory challenges that face small credit unions such as Maleny.
One of these is board communication with members. The board surprised a disengaged membership in January with its plan to unite one of the Blackall Ranges' ageing cooperatives with the most corporate of credit union mutuals, based in Brisbane.
With assets of around A$60 million and capital of less than $4 million, MCU has found it difficult to satisfy revised APRA requirements for a total capital ratio of 13 per cent and a core capital ratio of 10 per cent.
Discussions of MCU's capital needs and of its history were touched on but seemingly not explained in detail early in the process, though directors have found their voice in the local community and social media in recent weeks as the tone of the debate over MCU's future has become increasingly ill-tempered.
One letter, from MCU board chair Alan Harrington earlier this month, did address the issue and answered the often-raised objection that the credit union is profitable.
The trouble for MCU, and no doubt other smaller credit unions, is that they are still not profitable enough in the face of sharper supervision by the Australian Prudential Regulation Authority and the persistent burden of additional regulatory requirements regarding the conduct of banking institutions.
One positive for MCU is that the proposed merger may lead to a renewed engagement with the credit union, especially by Blackall Range residents.
Over recent years, new business flows have originated from outside MCU's traditional catchment area. One popular product has been MCU's personal loan for solar panels and hot water systems, which features a 10-year term.
Following the resignation of one director in recent weeks, as the ruckus over the merger continued, there are now four vacancies on the MCU board. Two of the six directors will retire at the annual meeting, so advocates of alternative strategies to that proposed by the board will have a chance to join the board and direct an alternative renewal path.