The merger of Credit Union Central of B.C. and Credit Union Central of Ontario is again being delayed because of valuation concerns over the centrals' portfolio of non-bank asset-backed commercial paper (ABCP).
The merger that will create Central 1 Credit Union is expected to close by next July 1, pushing the completion date nine months from the initial closing of October 1.
In September, the merger date was extended to the end of the year on the assumption that the liquidity crisis over ABCP would have been cleared up by then. But delays and uncertainty relating to a proposed plan to deal with the ABCP market by a special national committee forced the two centrals to delay the merger.
A national committee led by Toronto lawyer Purdy Crawford missed its December 14 deadline to provide a restructuring proposal for the more than $30 billion of non-bank ABCP sitting idle in the market. The committee set a new deadline of January 31 to deliver a restructuring proposal.
CUCBC holds $23 million in non-bank ABCP; Ontario Central holds $161 million. While the investments do not affect the centrals' liquidity needs, the current halt in trading of ABCP has made it impossible to accurately determine the relative value of each central's assets.
With head offices in Vancouver and Mississauga, the combined Central 1 will provide wholesale payments, treasury and Internet banking services to more than 200 credit unions in B.C. and Ontario.