Croatian Community Credit Union set to merge with Ukrainian community’s Karpaty

Tonci PRUSAC

MELBOURNE - Next month's Annual General Meeting of the Croatian Community Credit Union (CCCU) is expected to be a volatile one following revelations that the directors of the community based financial institution are exploring merger options with the Ukrainian community's credit union.

In a letter to members sent out earlier this month, which was seen by the 'Croatian Herald', CCCU chairman Milan Cindric revealed the institution's Board of Directors had entered into negotiations and signed a memorandum of understanding for the potential merger of the CCCU with the Karpaty Ukrainian Credit Union Ltd.

''If approved, this merger will provide CCCU members access to a much stronger balance sheet and extended services and products currently offered by Karpaty whilst retaining the Croatian identity,'' Cindric, who is Melbourne based, told members in the letter.

It is believed the merger is being forced upon the CCCU by the overseeing body of credit unions in Australia, the Australian Prudential Regulatory Authority (APRA). The reason being that the CCCU is alleged to have one of the worst member portfolios in the business - it's widely believed that many of its current clients should never have been approved for credit in the first place!

Cindric, in his letter to the members, admitted that things weren't exactly looking bright, saying that the CCCU'S profitability had taken a battering in recent years.

''Over the past few years, significantly increased competition from the domestic banks and the large mortgage providers as well as the ever increasing cost of complying with increased regulatory requirements have all played a part in impacting the profitability of our business.

''The most significant impact on profitability, however, has been loss write-offs and provisioning for bad and doubtful debts,'' said Cindric.

The CCCU, which was established seven years ago, has approximately 1400 members currently on its books. Its headquarters are located in the outer-western Sydney suburb of Liverpool. It also has a Melbourne branch, located at the Croatian Catholic Centre in Clifton Hill, which is mainly concerned with the business development side of operations.

The Karpaty Ukrainian Credit Union, on the other hand, has been around since 1970 and today has a head office in Sydney and a branch in Brisbane. Its membership is believed to be in the vicinity of 3,000, although this could not be confirmed.

According to official financial reports obtained from Karpaty's website, however, it can be confirmed that Karpaty did made an operating profit (after income tax writeback) of $84,206, while the value of its assets topped just over $32 million for the financial year ended 30 June, 2007.

According to Cindric's letter, should approval be granted by the regulators to proceed, all members will be formally notified of the due process.

''(The members) will have an opportunity to vote on the merger at a special meeting which will be held on a date to be advised. For now it's business as usual and I thank you for all your continued support,'' Cindric concluded in the letter to CCCU members.

The AGM of the Croatian Community Credit Union will be held on Friday 16 November 2007 from 7pm onwards at Sydney's Croatian Club Punchbowl.