Small places don’t need big banks

GREG YOUNGER-LEWIS

Nunavut can replace the out-going Bank of Montreal by tapping into the territory’s spirit of independence, say proponents pushing for a Nunavut credit union.

Bank customers, politicians and bureaucrats have been busy searching for solutions to the future closing of Nunavut’s branch of the Bank of Montreal in Iqaluit, after local management announced they will move operations to Ontario this winter.

Many observers are pushing for a made-in-Nunavut alternative to the big banks. Most notably, they want a credit union that puts less emphasis on large profit margins, and focuses more on customer needs. Many customers were furious to learn the bank is leaving Nunavut, not because the bank lost money, but because profits weren’t big enough.

However, in an interview last week, a leading member of the credit union movement in Atlantic Canada said Nunavut mainly needs a passionate and committed group of people – not massive profits – to create and maintain their own credit union.

“In starting a credit union, people have to want it,” said Alvina O’Brien, manager of the Eagle River Credit Union in Labrador. “You can bring a branch of any business and kind of sell it to people. But if a credit union is going to be successful, they have to believe in it and they have to support it.”

O’Brien speaks from experience. In the 1980s, the Bank of Montreal abandoned her isolated community of L’Anse-au-Loup near the southern shore of Labrador. Their branch said profits weren’t large enough, and other banks said they weren’t interested in filling the void.

Residents of the small, hardscrabble fishing town of 650 people were left with one banking choice: take a ferry and drive seasonal roads hundreds of kilometres away in Newfoundland.

Otherwise, people expected the town would be forced to return to a bartering system.

Instead, they built a credit union. The local fish processing company union chipped in $100,000, adding to $5,000 from a local development association.

Even the out-going bank helped out, by giving the fledgling group a cut-rate deal on office furniture and equipment. Quebec’s powerhouse credit union, Caisse populaire Desjardins, initially offered some support services, such as travellers’ cheques.

The community movement built nothing short of a financial miracle. On the credit union’s first day of business, they had no members and hardly any assets. All they could offer were savings and loans.

Twenty years later, the Eagle River Credit Union lists all the services offered at a modern bank, and boasts 4,700 members and nearly $40 million in assets. They’ve also opened two other branches in the region, and plan to expand into the Inuit communities near the northern shore of Labrador, not far from Nunavik.

“Our story has been the result of people coming together, forming partnerships and ensuring our own success,” said O’Brien, who joined the credit union after she lost her job as a teller for the local Bank of Montreal.

“We’re proving to those banks that we are here for the people that we are serving. We don’t need to be making mega-bucks to provide the same services. And nobody can take it away from us. It’s ours.”

O’Brien cautioned that establishing a credit union will require some sacrifices. As manager, she’s volunteered countless hours to make sure the work gets done.

Also, O’Brien said the credit union’s key to success comes from a dedicated board of directors, who she describes as people from the community, who care about the community, not profit-driven executives in southern Canada.

Despite increased competition in recent years, O’Brien’s credit union continues to turn a profit – a large percentage of which goes back to the members in dividends.

Over 20 years, the tiny credit union has returned nearly $2 million to members in shared profits. O’Brien also points out that the ever-growing group employs 38 people, and the lowest interest rates on loans in the region.

Members of Arctic Co-operatives Ltd., a leading group in the fight to find a made-in-Nunavut solution to replace the Bank of Montreal, cites the Eagle River example as proof that Nunavut can do the same.

“The banks, even if they’re making money, will still leave,” said Greg O’Neill, a consultant with ACL, who has been working on setting up a credit union in Nunavut since the late 1980s. “Credit unions… have a rooting in the community.”

ACL helped raise $6 million to form a credit union in the mid-1990s, but fell $1 million short of the amount legally required to start one up, after support from the government of the Northwest Territories and Nunavut Tunngavik Inc. fell through.