NCUA Bars Hostile Takeover Bid

ALEXANDRIA, Va. – NCUA ruled yesterday that Wings Financial FCU’s hostile takeover of Continental FCU is illegal and directed the $1.4 billion credit union to discontinue the bid. The federal regulator, which has been called on by Continental and the credit union establishment to bar the hostile attempt, ruled that Wings’ $200 offer to each Continental member amounts fo a pre-merger dividend, which is prohibited under the Federal CU Act. In addition, the promise of such a dividend by the continuing credit union–without the approval of the merging credit union–is not permitted, NCUA said. Continental FCU President Tom Glatt, who has been seeking NCUA’s assistance, immediately expressed his appreciation. “In its action, NCUA has removed a direct threat to the member-owners of Continental FCU, who very much oppose this blatant attempt to steal their credit union,” Glatt said in a prepared statement. Wings Financial, one of a handful of surviving airline credit unions (it formerly served Northwest Airlines), has been soliciting members of Continental FCU to support its takeover bid, offering them $200 each–a total of $5 million–from the excess Continental FCU capital if they can convince the Continental board to accept their takeover offer. The Continental board has rejected a merger offer from Wings on four different occasions. Wings Financial is soliciting the support of Continental FCU members on a petition urging the $180 million credit union to call a special meeting where members could vote on the Wings offer themselves. Representatives of Wings Financial were not immediately available for comment.