BARCELONA, Spain–The economic crisis in the U.S. is hitting CU balance sheets around the world in different ways, credit unions attending the World Council of Credit Unions World CU Conference here told Credit Union Journal.
A board member of a credit union in Australia, where the downturn has been less severe than in the U.S., said the primary effect is seen in rates being charged (around 5% for a mortgage) and paid (perhaps .05% on most deposits), down from 8% and 5%, respectively, a few years ago.
A CU in Ireland called the issues being faced by that island country "pretty bloody significant."
In less developed countries the fallout is often primarily affected by regulation and oversight. WOCCU EVP/COO Brian Branch noted that during a workshop among African credit unions held prior to the launch of the World CU Conference the economy’s effects were a "matter of degree," for instance.
On the plus side, Branch said many credit unions around the world are seeing a surge in membership and deposits, the latter often small savings accounts. "They are also seeing big increases in loan portfolios, but again that’s many smaller loans," Branch said. "Members of credit unions in many countries outside the U.S. are micro-entrepreneurs, so they need small loans."
The negative trend, acknowledged Branch, has been that the credit growth of recent years took many CUs by "surprise," a situation compounded by the fact many countries lack any sort of credit bureaus and the credit unions have inadequate risk analysis tools. "You can have two countries that speak the same language and have similar cultures and might be right next door, but in one credit unions did not have much discipline and did not stay on top of provisions and they do not have much capital to fall back on, and in the other they have really grown and built a capital cushion," said Branch.
As a result, much of the World CU Conference’s agenda is focused on credit risk tools and other related analysis, Branch said. The meeting is the largest gathering of credit unions on the European continent, with 62 countries represented. The U.S. delegation remains the largest, but its number was noticeably smaller than other recent World Council events
