Maleny's board sees no alternative to merger

Members of the Maleny Credit Union will vote on the mutual's future on 25 June, after the board of directors sets a date for the contested merger with Brisbane-based Credit Union Australia. The board first proposed the merger with CUA back in January.

A local campaign has emerged in Maleny, the Sunshine Coast hinterland town that was famous for its community activism and support for cooperative business models - a principal embodied in the formation of the credit union, in 1984.

After investing in an a new technology platform in 2009, and rebranding in 2010 as MCU Sustainable Banking - and reporting a record profit in 2010 - the credit union's seven directors have nevertheless concluded MCU isn't viable.

In a letter to members, circulated on Friday, Alan Harrington, chair of the board of MCU, wrote of the credit union's "weak capital position, and the increasing complexities and costs of compliance, governance and management.

"It would be unsustainable for MCU to provide reasonable and competitive long-term benefits for members," he wrote.

The directors point to an effective cap on the size of loans at A$370,000 under prudential regulations.

They argue that the alternative to a merger with CUA is a merger with another credit union, rather than trading independently.

MCU has 500 members, assets of $62 million and net assets of $3.7 million. Net profit increased 17 per cent in the December 2010 half-year.

Opponents of the merger have organised under the banner "Friends of Maleny Credit Union". They staged a demonstration outside the credit union's Maleny branch on Saturday morning, before attending an information meeting at the RSL club.

As average credit union numbers have declined from more than 700 twenty years ago to only 100 or so today few merger proposals have been derailed by members.

The merger will need the support of 75 per cent of members when it is voted on at the credit union's annual general meeting next month.