Manitoba’s credit unions are becoming a bigger force in agricultural banking with a deal to buy 14 rural Bank of Montreal branches.
Last week, nine credit unions announced they will buy the branches, including their agricultural loan portfolios of close to $40 million.
Art Budd, an official with Credit Union Central of Manitoba, said the new loans are a significant addition to the $725 million loaned by credit unions to farmers.
The sale is similar to deals in Alberta and Saskatchewan, where credit unions bought 24 Bank of Montreal branches in February.
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Ed Allinott, Bank of Montreal vice-president for Manitoba, said the bank started discussions with Credit Union Central more than a year ago.
“We looked at some of these small rural branches and it was becoming more and more difficult to provide face-to-face banking in some of these remote communities,” he said.
But the bank wanted to avoid some of the negative publicity other banks drew by closing rural branches.
“Closing was definitely not a good option,” Allinott said, explaining some of the 14 branches may have shut their doors had a buyer not been found.
Instead, the bank will earn $11 million from the sale to the credit unions. All 69 employees in the branches will keep their jobs and the bank’s 24,000 customers will not have to move their accounts.
The sale leaves the Bank of Montreal with about 25 branches in Winnipeg and 10 outside the city, mirroring population spreads in the province, he said.
There are credit unions in 105 communities in Manitoba, half of which have no other financial institutions.
“Rural Manitoba’s basically been our bread and butter,” said Budd of Credit Union Central.
Budd said it will be business as usual for farmers who have loans with the affected Bank of Montreal branches.
Credit Union Central studied the banks’ larger agricultural loans at the 14 branches. Budd said the loan portfolio was solid, although there were a few loans that gave the credit unions pause.
“We can’t go in there and pick and choose,” he noted.
The federal Competitions Bureau is reviewing the transfer.
Allinott said the transfer doesn’t reduce competition. The Bank of Montreal will continue to compete for agricultural loans at its regional centres, and offers customers telephone and electronic banking.
“We’re banking more and more by clicks than mortar,” he quipped.
Souris, Man., farmer Verne Saunderson agreed competition will be unaffected by the change.
He banks at Westoba Credit Union in Souris, which bought the Souris Bank of Montreal branch.
Because Brandon is less than 50 kilometres away, farmers can shop around there, or electronically, Saunderson said.
“I just hope people give the credit union a chance,” he said, noting service charges are lower and local business hours longer.
“They’ve got to earn (the business). It’s not going to fall in their lap.”
