Evidence of meeting #3 for Special Committee on Cooperatives in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cooperatives.
A recording is available from Parliament.
Liberal
Mauril Bélanger Liberal Ottawa—Vanier, ON
Do you have a similar figure, Mr. Fitzpatrick, for the credit union movement, showing how much it may have paid in bonuses to its executives and staff?
Vice-President, Corporate Services and Chief Financial Officer, Credit Union Central of Canada
It's less.
Vice-President, Corporate Services and Chief Financial Officer, Credit Union Central of Canada
I'm sorry, I don't mean to be flippant.
No, we don't collect that kind of information.
Liberal
Vice-President, Corporate Services and Chief Financial Officer, Credit Union Central of Canada
Within individual credit unions, they would have that information. But at a national level, we don't collect compensation totals on individual credit unions. We leave that to them.
Conservative
Vice-President, Policy and Operations, Canadian Bankers Association
Can I just make a comment on the nature of bonuses?
Conservative
The Chair Conservative Blake Richards
No, your time has expired. I was just going to allow him one last chance to make a comment, but your time has expired.
Vice-President, Policy and Operations, Canadian Bankers Association
The whole nature of a bonus within this context is to make part of the compensation dependent upon performance. It's a way of encouraging employees, whether executives or rank and file, to work better and achieve their objectives. It's not like a Christmas bonus; it is something designed to incent them to be good employees. That's the context within which you should look at it.
Conservative
The Chair Conservative Blake Richards
Thank you. Time has expired for that round of questioning.
We move to the second round and begin with Monsieur Gourde.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
Thank you, Mr. Chair.
I want to thank the witnesses for being here this morning.
Right now, what challenges do Canada's credit unions face nationally speaking? Then I would like to know what those challenges are at the international level. We all know that there are big groups, that our credit unions joined forces to improve their service offerings to members. But I am sure they've still got some challenges on their hands. Could you tell us a bit about that?
Vice-President, Corporate Services and Chief Financial Officer, Credit Union Central of Canada
Forgive me, but is the English interpretation available?
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
There is a problem with the interpretation, Mr. Chair.
Conservative
The Chair Conservative Blake Richards
Did you miss the translation of that? I'm sorry.
You should have translation there. I believe you'll want to have it on channel 1.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
In that case, I will repeat my question.
Conservative
The Chair Conservative Blake Richards
Monsieur Gourde, I'll give you extra time at the end of your time to allow you to pose that question again.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
Thank you.
Canada's credit unions have joined forces. They face challenges both nationally and internationally. Could you describe those challenges, in terms of competition, the services they want to offer members, and their ability to compete with the banks?
Vice-President, Corporate Services and Chief Financial Officer, Credit Union Central of Canada
I would say that the challenges credit unions face include that we're in a competitive marketplace, competing with banks every day. We do not have an international focus at credit unions. We are in the domestic market, competing in small towns and large cities across Canada with the banks, with a lot of the same products and services. Among services and products that we do not offer are investment banking types of product or derivatives, and we don't do very much in the arena of foreign exchange. We do a little trading, but we don't have large, active trading desks, as the banks have.
We're competing largely for lending and deposit business in local communities. At the same time, we have to compete on the technology front, so we have to be, and are, as advanced as the banks when it comes to payment vehicles, such as your chip debit or credit card, for example.
The challenge for us is that because we're smaller, we have to work together. An individual credit union competing with a large bank has, from a technology point of view, a difficult challenge. We tend to try to do things as a collective so that we can introduce and implement things more efficiently. In essence, we're competing with the banks every day, but more on the bread and butter issues for Canadians; we're not involved in the arenas of international finance or investment banking—those sorts of activities.
Does that address your question?
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
Yes, that answers my question.
Why do you think credit unions are so popular in Canada? Is it the involvement of their members, the fact that they offer local service, or is it just that they stay quite competitive?
Vice-President, Corporate Services and Chief Financial Officer, Credit Union Central of Canada
First of all, we provide a high level of service. I mentioned at the very beginning that consistently in surveys, for seven years running, credit unions have ranked at the top of financial services in terms of offering service.
That's the most effective way for us to compete. We offer many of the same products and services, as I said earlier.
The key to success for us is keeping that service level up. Credit unions, and cooperatives for that matter, were formed in the beginning because there were gaps in the market. Local communities felt they weren't getting the service they needed. With regard to the aspect of local membership, even a large credit union with 100 branches is still operating within a community. Whether that community is a town, a city, or in some cases across a province, they are still reflecting the character of the community they're operating in. That local ownership makes a big difference in the way they carry out their activities in the marketplace.
As far as competing, I think because you reflect the community you're in, you appreciate the dynamics of the economy you're in and support it in that way. I think for credit unions the strength comes from that local knowledge and presence.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
I have one last question, as I'm almost out of time. Could you tell us how much Canada's credit union market share is expected to grow over the next five years, perhaps using the previous five years as a guide? What kind of growth are we talking about? Roughly 1% or 2% per year?
Vice-President, Corporate Services and Chief Financial Officer, Credit Union Central of Canada
That's very hard to say. As we said, last year we grew 10%. We don't tend to do that type of system projection to think how quickly we'll grow, because it does very much vary from one community to another. If we gain a greater presence in, say, the Toronto market, where we are not as strong today, then that growth could stay in the double digits. If not, it would likely be less than that.
Conservative
The Chair Conservative Blake Richards
Thank you very much. Time has expired.
We move now to Mr. Marston.