Billion-Dollar Payout Awaits CUs in Visa’s IPO

SAN FRANCISCO – The credit union movement is headed for one of its biggest paydays ever–as much as $1 billion worth of stock in Visa Inc.–when the cards giant goes public later this year. “This is big, big money,” said Dallas Bergyl, president of Inova FCU, a $320-million Elkart, Ind., credit union that will receive 19,211 shares in the initial public offering. At an estimated of $50 a share, that amounts to almost $1 million. Other larger credit unions are receiving much larger apportions, based on their transaction volume with Visa. North Carolina’s State Employees CU, for example, will receive 263,000 shares, more than $13 million at the $50-a-share projection. More than 2,000 credit unions that are among the principle 14,000 financial institution members of Visa will receive stock in the new company, which will represent a consolidation of Visa USA and Visa Canada (members of Visa Europe have decided not to participate). Under the terms of the IPO, the members cannot sell their shares for at least three years. NCUA is discussing how to treat this credit union windfall, estimated to be as much as $1 billion, even before a run-up in the stock. When MasterCard went public in 2005 and issued stock to hundreds of credit unions, federal credit unions were allowed to hold the shares, which have almost quadrupled in value since then–one of the hottest stocks in the market since their debut. The IPO for Visa, which is much larger and profitable than MasterCard, is expected to dwarf the MasterCard payout. Like MasterCard, Visa will be controlled by the biggest banks after the IPO, with Bank of America, JP Morgan Chase, Citi, U.S. Bancorp and Wells Fargo, holding almost 30% of the voting shares.