'Far-Reaching Changes' To Corporates Required, Group Says
WASHINGTON-CUNA's Corporate Credit Union Next Steps Working Group has issued a final report. The report notes that whether today's corporate CU network can evolve to be the best provider of financial services to credit unions hinges on its ability to make the "deep and far-reaching changes."
If the corporate network is unable to do so, the report states, CUs will have a variety of options other than corporates to meet their needs, which are detailed in the working group's report.
According to the report, other factors that will affect the corporates' ability to remake themselves include coming revisions to corporate regulations from NCUA and the specifics of the agency's upcoming plan for dealing with corporates' legacy assets.
"If the necessary changes do not occur," the Working Group concluded, options will need to be explored, "although many credit unions will find these alternatives more costly and less service-driven than they have experienced with corporates in the past."
The Next Steps Working Group was formed to further explore the recommendations issued in February 2010 by CUNA's Corporate Credit Union Task Force. Both groups were chaired by Terry West, CEO of VyStar Credit Union, Jacksonville, Fla.
The task force report called for a sharply revised corporate business model, with smaller balance sheets and greater focus on payments-related rather than investment services. The Next Steps Working Group had the mission of ensuring credit unions continue to have access to the services they have been relying on corporates to provide, according to CUNA.
Among the report's conclusions:
• Smaller corporates will need to arrange for the services previously offered in conjunction with US Central FCU, which is now in conservatorship, by contracting with third parties, combining with other smaller corporates to provide these services or merging into larger corporates with the necessary infrastructure.
• The issue for larger corporates is to determine which has the best infrastructure to efficiently provide services.
• The current corporate system has the core elements to meet the needs of most credit unions, and that a system owned and controlled by credit unions is most likely best for the movement in the long run.
The complete report is available at http://www.cuna.org/initiatives/corp_report/index.html.