SAN DIMAS, Calif. – NCUA said yesterday after news of the failed recapitalization by WesCorp FCU it has no plans to shutter the failed corporate credit union and is now soliciting acquirers to obtain the WesCorp business in a way that will have minimal disruption of member credit unions.
The new role comes as a reversal for NCUA, which has insisted all along it won’t lead a consolidation of the corporates, but will leave that up to members of the corporates. But news that WesCorp failed on its plans to recapitalize, coupled with last month’s failure of Southeast Corporate FCU to recapitalize, puts NCUA in a new role shaping the corporate landscape. The failure of the two corporates to recapitalize also puts into question a plan for 14 corporates to buy the payment services of U.S. Central FCU and continue to operate it as a business. The capital raising efforts come as NCUA has assessed credit unions a $2 billion charge for the corporate resolution, which must be paid in the next four weeks.
WesCorp, which sought a new charter as United Resources FCU, sought to raise $200 million in new capital, but raised less than half of that, about $90 million.
The new plans for WesCorp may include a merger with or acquisition by another corporate or wholesale financial institution, said NCUA, which has been operating the one-time $34 billion corporate under conservatorship since March 2009.
“We anticipate that a solicitation and bidding process will begin very soon,” Scott Hunt, director of NCUA’s Office of Corporate CUs, said in a notice to WesCorp members Thursday afternoon. “In order to enable a fair bidding process, obtain the best possible solution for member credit unions, and ensure the best financial outcome, within sound public policy, for the Temporary Corporate Credit Union Stabilization Fund, much of the process must be done confidentially.”
“In negotiating a ‘package’ transaction, our efforts are best maximized by retaining the volume of members and service activity that currently exists at Western Bridge,” said Hunt. “Stabilizing the customer and service base maintains the value of the institution for potential bidders.”
WesCorp said it received only 265 capital commitments totaling $82 million, less than half the $200 million it sought from its 1,000 members.
