Milan Cindric, the Chairman and only Melbourne based member of the CCCU Board, currently finds himself in a rather difficult situation.

The sudden about-face by Karpaty, he claims, was due to the fact that Karpaty had reassessed the commercial viability of a merged entity in the longer term, which was particularly important in the current environment of rising interest rates and increasing loan defaults.

He took time out of his busy schedule to speak exclusively to the 'Croatian Herald' on Wednesday to clear up the situation regarding the CCCU and to allay any possible fears members might have.

CROATIAN HERALD (CH): Is the current situation the culmination of a long brewing situation with regards to the CCCU's deteriorating financial state of affairs?

MILAN CINDRIC (MC): The current situation is the result of CCCU management and directors seeking to protect members' funds and to secure an improved future through expanded products, services all backed by a stronger business balance sheet.

The directors and management acknowledged some time ago it was becoming increasingly difficult for a small business like ours to survive with increasing compliance obligations, increased competition, provisioning for loan loss and the subsequent write-off of loan losses.

(CH): The Melbourne office officially closed last Thursday. What will happen to the Sydney office?

(MC): The Melbourne office is now closed and all Melbourne matters will be handled by the Sydney office. The Sydney office will remain open for business as usual until regulatory approval is obtained which is expected around March or April.

After this time, the Sydney office will also close and the CCCU staff and business will be co-located with Community First and operating as Community First. Prior to the closure of the office, all members will be notified of how and where to conduct their banking with Community First.

(CH): What will happen to members accounts and loans?

(MC): Members will not be impacted. Member loans and accounts will move to community first. Members will see an immediate improvement in products and services offered such as telephone banking, BPAY, ATM access to name a few. These are all services CCCU members have long sought and regularly requested but CCCU were unable to provide.

(CH): What about the various community based organisations and individuals who were the original foundation members? Will they get their money back?

(MC): We have always been grateful to those community organisations and our foundation members whom helped us create the CCCU. It is expected, foundation members will be required to complete form to request their donation be returned. The refunds will be subject to and finalised within approximately three months of the merger approval and completion.

(CH): As the Chairman, is this disappointing for you and in which way? How will the Croatian community in Australia feel this loss?

(MC): My view is given the current circumstances, this is a positive outcome for the CCCU as CCCU members will become part of a solid and significantly larger credit union better able to provide for the future. Community First is the largest community based credit union is Australia.

However, both myself and my fellow Croatian directors are personally disappointed that after nearly nine years of hard work our community will lose control of what we believe to be the most sophisticated Croatian community organisation ever established in Australia.

The community will no longer be able to count amongst its portfolio of clubs, associations, churches, Croatian schools, soccer clubs, dancing clubs etc an Australian regulated financial institution. Perhaps to many these organisations are more important than a credit union.

(CH): So, is this the end for a Croatian community backed financial institution in Australia?

(MC): Members will be able to continue their banking with Community First. Any new members will be most welcome to contact Community First to discuss their banking needs.

Following the completion of the merger, the CCCU as a standalone entity will no longer exist. Whilst nothing is impossible, I would think it unlikely, particularly in the short term, that the community could source the resources required, (both skilled experienced people and funding) and meet the regulatory criteria of establishing another financial institution in Australia.

However, had the community been more supportive and truly recognised the value of the organisation it had, there would not have been a need to merge.

(CH): What is the current financial state of the CCCU? Is it in debt or has it made a profit (accumulated) and what will happen with this, will it be divided amongst members, foundation members or swallowed up by the Community First Credit Union?

(MC): The CCCU is not in as good a financial position as it would like to be. A members information statement will be issued shortly to all members. This statement will contain more detailed information relating to the merger including financial statements for both CCCU and Community First.

Regardless of whether the CCCU was in a loss or profit situation, there would be no distribution of funds to members. The CCCU as a trading entity will transfer in its entirety to Community First.

Tonci PRUSAC