Concentra

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Bank Continuance

Frequently Asked Questions

 


 

1. Why continue as a bank?

 

The financial services market is increasingly competitive and rapidly evolving. Concentra’s ability to compete in this environment is becoming more restricted by its current legal structure. Today, Concentra continues to be Canada’s only co-operative retail association, which presents a number of challenges for our company.

Continuing as a bank will allow Concentra expanded access to capital markets, provide increased recognition, reduce administrative requirements, build scale and scope, and expand opportunities across our wholesale banking and Concentra Trust business lines – all contributing to Concentra’s capacity for supporting credit unions.

 


 

2. What is the value for the credit union system?

The most important reason driving bank continuance is the need for Concentra to evolve in order to continue providing support for credit unions to compete in the financial services industry.

By converting to a bank, Concentra strengthens its capacity to deliver solutions to improve financial performance, diversify risk and meet member needs. Specifically, Concentra will have access to a wider depth and breadth of market structures to build scale and scope, improving capability to fuel credit union growth. This includes:

  1. increased scale and scope of commercial and residential asset solutions
  2. ability to issue capital with more attractive features for credit unions
  3. ability to attract capital from within and outside the credit union system

 


 

3. Will Concentra lose its co-operative roots by continuing as a bank?

Concentra will remain a co-operative owned financial institution. Conversion to a bank will not compromise this status.

Concentra has deep roots within the co-operative movement, and remains 100% committed to strengthening the co-operative system in Canada.

Concentra will continue as a credit union-focused company, providing wholesale banking and trust solutions to the credit union system. We are taking measures with our mission statement, corporate governance structure, and by-laws to enshrine co-operative values and ownership.

Our Board of Directors and entire staff sign an oath each year confirming that support of the credit union system is integral to their term as a director or employment with Concentra.

Our corporate social responsibility program will continue to focus on co-operative initiatives across Canada. Examples include our national emPOWERING Your Communities campaign, long-term commitment to the Co-operative Development Foundation, and the University of Saskatchewan’s Centre for the Study of Co-operatives, as well as membership in Co-operatives and Mutuals Canada.

 


 

4. Will Concentra pursue capital from outside the system? If so, how will it impact the ownership of Concentra?

Concentra will retain ownership, represented by common shares, within the co-operative system. The future intent is to broaden ownership within the system, which includes transitioning to increased direct control by credit unions across Canada. We are taking measures through our mission statement, corporate governance structure, and by-laws to guarantee and protect co-operative ownership of Concentra.

Concentra intends to attract investment capital from both within and outside the co-operative system through the issuance of Class A preferred shares. Outside capital would only be pursued if it furthers our mission to serve credit unions and will not carry ownership rights under normal scenarios.

 


 

5. What is the difference between common shares and preferred shares?

The authorized capital of Concentra will include an unlimited number of:

  1. Common Shares, which will be comprised of the former membership shares, Class A shares (and, at the election of the Class B shareholder, Class B shares) of Concentra, will have ownership rights and will participate in the governance structure of Concentra. These shares will be issued only to co-operative financial partners.
  2. Preferred Shares, which will be comprised of the former Class D shares of Concentra, are strictly investment capital and do not have ownership rights. These shares will be issued to co-operative and non-co-operative financial partners.                  

 


 

6. What will the new governance structure look like?

The new governance model proposes a 12-member board. Industry best practice indicates this to be appropriate number of directors for an organization of the size and complexity of Concentra. A board of 12 will provide sufficient diversity and scale to effectively represent shareholder interests, while enhancing the Board’s efficiency and responsiveness, and allowing for an effective decision-making process.

The Bank Act requires the Chief Executive Officer of a bank to be a member of the Board of Directors. The Nominating Committee will identify and recruit the remaining 11 candidates for election in accordance with federal regulatory requirements, and in a manner fully aligned with our owner’s interests and established governance principles reflecting Concentra’s commitment to the credit union system.

 


 

7. What will be the composition of the Board of Directors?

The proposed by-laws will require the majority of the board to be independent. "Independence" means a director is independent of management, does not have a material relationship with the bank and does not financially benefit from his or her relationship with the bank. The expectation is independent directors with the requisite skills and knowledge for the Concentra Board are available within the credit union and co-operative system.

The nominating committee is responsible to ensure a diverse Board that continues to possess the required core competencies, priority skills and expertise required to fulfill its legal and fiduciary role and responsibilities to its owners and key stakeholders. The Concentra Board of Directors has established that certain principles of governance are of utmost importance, including the need to ensure that the Board continues to reflect its ownership and customer base, and operates in amanner aligned with co-operative principles and values.

 


 

8. Will Concentra compete directly with credit unions?

Our business model remains the same. Concentra will continue to provide relevant wholesale banking and trust solutions to credit unions to enhance their ability to compete in the financial services industry.

Concentra is committed to evolving in order to better support the success of the credit union system. While a change in our corporate legal structure is a means to that end, the structure will not dictate nor change the business model.

 


 

9. Given the plans for future issuance, has there been consideration to value the Class A shares?

 

Given there will be no change in ownership, or a proportionate share of ownership, upon continuance, it is not necessary to value the shares at this point in time. An independent valuation of the company is expected to be performed in the future before new common shares can be issued.

 


 

10. If a credit union does not have ownership shares, can it still use Concentra’s services?

 

Absolutely. Our services are currently available to any credit union, whether or not they have membership or ownership shares in Concentra. This will not change upon continuing as a bank.

 


 

11. Has there been a discussion with CUDGC regarding the excess liquidity invested with Concentra? Will investments need to be re-classified?

From a regulatory perspective, there will be no change to the classification of investment in Concentra. However, individual credit unions would be advised to confirm their investment policy allows shares to be held in a bank.

 


 

12. Will individuals be able to invest in Concentra, or is it restricted to corporate entities? The purchase of common or preferred shares will be restricted to corporate entities. This approach is in support of Concentra’s commitment to be broadly owned and directly controlled by credit unions. Concentra is taking measures to embed co-operative ownership in its by-laws to ensure it remains a core tenet and safeguards the ownership of Concentra to its financial co-operative partners.

 


 

13. What is the current status of the wholesale and trust consolidation discussions between Concentra and Central 1?

Concentra and Central 1 took a pause from the consolidation discussions in order to allow the centrals to focus on the clearing and settlement strategy. Concentra continues to support a vision for one primary wholesale and trust solutions provider in the credit union system, and maintains dialogue with Central 1 to further this objective.

 


 

14. When is the target date to be operating as a bank?

Our goal is to be operating as a bank on January 1, 2017.

 


 

15. What are the next steps?

 

Over the coming months Concentra will:

  • A Special Meeting of Members and Shareholders was held electronically on September 28 to vote on two Special Resolutions: amendments to current bylaws, and approval to proceed with bank continuance.
  • Members and Shareholders voted overwhelmingly in favour of Concentra moving forward with bank continuance.
  • Concentra has filed a formal application with the federal Ministry of Finance, requesting approval to operate as a bank on January 1, 2017.