Co-operatives, Financial

A lack of financial services on the prairies during the Depression led to the establishment of the co-operative financial sector. During the 1930s, the number of bank branches in Saskatchewan declined by 40%. The banks were also accused of setting high interest rates and operating conservative loan policies, factors that led to a determination to develop locally based and locally responsive financial institutions. The financial co-operatives detailed here include the credit unions and Credit Union Central, The Co-operators Group (a holding company for nine financial services organizations), and Co-operative Hail Insurance. Figures for the Co-operative Trust Company of Canada are included with those for Credit Union Central of Saskatchewan.

At the end of the 1990s, there were 154 financial co-operatives in the province, most of which were credit unions, with 560,000 active members and $7.5 billion in assets. Active membership for this sector overall declined by about 4% during the 1990s, but the number of employees rose slightly and the wage bill increased by nearly 60%, from $116 million to $186 million. Assets rose during the same period by 9%, and member equity grew from $157 million to $563 million.

The first credit union in Saskatchewan was organized in Regina in 1937. By 1996, the credit union system in Saskatchewan had grown to include 340 credit union outlets and almost $7 billion in assets. Local ownership and control, combined with the establishment of a large, province-wide, central organization, allowed members to take advantage of the efficiencies provided by economies of scale while maintaining responsiveness to local needs. Firms that were locally owned and controlled could continue to provide services in communities where it was no longer profitable for a private firm to do so. Local ownership also meant that the money deposited locally was more likely to remain in the community.

Originally established around a rural population with limited mobility, the credit unions are now undergoing a consolidation process common to many institutions within the province. Trends towards greater urbanization and reduced economic activity in the smaller towns and villages have heightened the need for the reinvestment of savings back into the community. And the globalization of financial services finds the credit unions increasingly in competition with the traditional banking system, as well as with other financial institutions.

At the end of the 1990s, 339 credit union locations representing 151 credit unions reported assets totalling $6.5 billion, up from the $5 billion reported a decade earlier. Over the same period, the number of employees rose by nearly 14% and the wage bill by 59%. Although revenues dropped from $587 million to $482 million, savings rose from $26 million to $37 million and member equity grew at an astonishing rate, from $14 million to $430 million.

The credit unions own Credit Union Central (CUC), which serves the system by providing financial services, information technology support, and consulting services. As part of its efforts to support the credit unions, CUC has developed a number of alliances and partnerships. Insurance products for credit union members are provided through the Co-operators Group and CUMIS Insurance Company. Financial planning and trust and estate services are offered through MemberCARE Financial Services and the Co-operative Trust Company of Canada. A variety of products and services are available through a number of other joint ventures, such as CU Electronic Transaction Services and Credit Union Payment Services.

It is important to note that the data for Credit Union Central reported here include Co-op Trust's activities, which had been considered separately by the Department of Justice until the late 1990s. For comparative purposes, CUC and Co-op Trust data from earlier in the decade have been added together. CUC assets at the end of the 1990s were $2.4 billion, as compared to $1.7 billion ten years earlier. Revenues fell considerably, from $226 million in 1989 to $185 million at the end of the 1990s, while member equity rose from $121 million to $137 million. The number of people employed fell slightly, while the wage bill more than doubled, to $31 million. Even more remarkable was the increase in capital investment from $3.7 million to $31.2 million.

Substantial growth in the co-operative sector during the 1940s generated a demand for long-term loans that could not be adequately met by the small localized credit unions that existed at the time. Co-operative Trust was established in 1952 to provide individuals with trust services and to extend long-term loans to co-operative organizations. In 1967, Co-operative Trust expanded beyond the boundaries of Saskatchewan to become a national firm. Although it is governed by a board representing credit union systems across Canada, Credit Union Central holds a majority of the voting shares, and financial and other statistics generated by the trust company, as noted above, are included with CUC data.

Co-operators Group Limited is a national firm owned by thirty co-operatives across Canada. In Saskatchewan, ownership consists of Federated Co-operatives, Credit Union Central, and Saskatchewan Wheat Pool. Co-operators Group is the holding company for the following wholly owned companies: Co-operators Life Insurance, Co-operators General Insurance, COSECO Insurance Company, The Sovereign General Insurance Company, Co-operators Financial Services Limited, Co-operators Investment Counselling, Co-operators Development Corporation, Federated Agencies Limited, and HB Group Insurance Management Limited.

The Co-operators Group owned assets worth $172.6 million in Saskatchewan at the end of the 1990s, dramatically up from the $22 million reported in 1989. Revenue from Saskatchewan over the same period was down by about 7%, and employment fell from 973 to 620 individuals; but the wage bill over the same period increased from $28 million to nearly $39 million.

First organized in 1947 by a group of farmers in the Edenwold district of Saskatchewan, Co-operative Hail Insurance, now based in Regina, has members and policy holders in Saskatchewan and Manitoba. Statistics reported here reflect Saskatchewan's share of this economic activity. At the end of the 1990s, Saskatchewan farmers accounted for more than 77% of the co-operative's membership, which remained stable over the course of the decade, rising only 3% from 70,095 to 72,173 individuals. Although the number of policies written in the province fell during the same period, revenues increased by 36% to $16.3 million. The value of assets grew by about the same percentage, to $30.9 million; and member equity rose as well, from $22.8 million to almost $27 million. The number of employees increased dramatically, from ten full-time and six part-time positions in 1989 to seven full-time and ninety-two part-time positions ten years later. Although the wage bill increased from $254,000 to $475,000, the average salary dropped from $15,875 to $4,798, reflecting the large number of part-time workers at the end of the decade.

Nora Russell

Further Reading

Fulton, Murray, et al. 1991. Economic Impact Analysis of the Co-operative Sector in Saskatchewan, Research Report Prepared for Saskatchewan Department of Economic Diversification and Trade; Ketilson, Lou Hammond, et al. 1998. The Social and Economic Importance of the Co-operative Sector in Saskatchewan, Research Report Prepared for Saskatchewan Department of Economic and Co-operative Development; Herman, Roger and Murray Fulton. 2001. An Economic Impact Analysis of the Co-operative Sector in Saskatchewan: Update 1998.