SAN DIEGO-The field of potential acquirers for WesCorp/Western Bridge Corporate CU has been narrowed down to four unidentified bidders, with action expected by the end of November.
All bidders are other corporates, but Scott Hunt, director of NCUA's Office of Corporate Credit Unions, said the NCUA Board did consider the possibility of a bank being the winning acquirer of the remnants of the failed corporate. The board decided the potential for mass deconversions was too much of a risk.
"The witching hour is Nov. 4, when the bids are due. The goal is to make a decision in November, but we do not have a hard date because we don't know what the bids will look like," Hunt told the California and Nevada leagues' annual meeting. "Will they ask for assistance from NCUA? Will they want a capital raise from Western Bridge members?"
There is a NCUA Board meeting scheduled for Nov. 17, but Hunt indicated a special meeting may be necessary if all issues cannot be resolved prior to that date.
Asked if all of the services provided by WesCorp/Western Bridge would be preserved with the winning bidder, Hunt said NCUA believes a "holistic solution is best for minimizing disruptions downstream."
According to Hunt, all four bidders have completed due-diligence and intend to produce bids. He said a bid that is too vague regarding future capital calls will be looked at unfavorably.
"I don't want a problem to evolve two years down the road," he explained. "I have confidence in the ability of my staff to poke holes in plans that are too aggressive or rely on perfect scenarios in the economy. There is no way for NCUA to mandate a capital call, it would need a vote."
The regulator is "generally comfortable" with the standards corporates are using today to minimize outages and disruptions, he added.
Benefits of Scale
NCUA "recognizes the benefits" of scale and consolidation, Hunt said, adding it remains concerned about systemic risk.
"We do not want to combine two bridge corporates to create a large and powerful, NCUA-controlled entity that would compete with independent corporates," he said.
What Hunt is hearing from most members of WesCorp/Western Bridge is it is time to move on after two-and-a-half years of uncertainty. He said he has not prejudged any of the four bids. "It really is an open book."
If none of the four bids is satisfactory, Hunt said it would create an unsavory Plan C involving banks and vendors. "I don't want to get there," he said. "I am hopeful with four bidders they know it is competitive and will put their best foot out there. Western Bridge has cleaned up its balance sheet, so the transition is ready."
Hunt invited any CU manager that does not understand the resolution plan for Wes-Corp/Western Bridge to contact NCUA with questions.
