Notice of Special Resolution to be heard at the
Annual General Meeting
January 23, 2018
Dear Member,
Now that the town hall meeting has been completed the board of directors of Canada Safeway Limited Employees Savings And Credit Union Limited are inviting you to the 65th Annual General Meeting.
Date:February 13, 2018
Time: Registration 6:30 PM, Meeting Start 7:15 PM
Place:Coast Plaza Hotel -1316 33 St NE, Calgary, AB T2A 6B6
The purpose of the meeting will be to have our 65th Annual General Meeting followed by a presentation by the board and vote on a Special Resolution.
At the Annual General Meeting, members will be asked to support the following Special Resolution:
- Having been presented with the Amalgamation Agreement for the amalgamation of the Canada Safeway Limited Employees Savings and Credit Union Limited and Servus Credit Union Limited and upon hearing the recommendation of the Board of Directors of the Canada Safeway Limited Employees Savings and Credit Union Limited that it is in the best interest of Canada Safeway Limited Employees Savings and Credit Union Limited to enter into the Amalgamation Agreement,the members approve the Amalgamation Agreement.
- The directors and the solicitors of Canada Safeway Limited Employees Savings and Credit Union Limited are authorized to take all steps necessary to complete the Amalgamation on the terms set out in the Amalgamation Agreement.
The resolution will require approval of a two thirds majority of votes cast by eligible Canada Safeway Limited Employees Savings and Credit Union Limited members in attendance at this meeting. The provincial regulator must also approve the merger.
Please refer to the Amalgamation Agreement and Business Case available on the website at at our branch or by calling 403-261-5681. These documents include more detailed data regarding this amalgamation including the mutual benefits, due diligence review, financial projections, post-merger operations, timeline and implementation. The Business Case outlines the reasons for our recommendation to amalgamate, summarized as follows:
Loss of Common Bond: Canada Safeway, the historic employer-based common bond of the credit union was sold to the second-largest supermarket chain, Sobeys, a division of the conglomerate Empire Company, in 2013. This sale diminished the connection between the credit union and the grocery retailer and diluted the credit union’s common bond of connection to a large portion of its current and potential future members.
Technology: Safeway's current computer banking system is at its maximum in terms of functionalities and performance. It has critical limits with regards to development and provision of new products and services. It is not capable of live ATM balances, e-transfers and remote deposit, nor will it be able to implement any new products or services as these become available. Safeway is also one of only five users of the system so costs will continue to increase. The cost of transition to a new system in both capital outlay and operating expenses would have a dramatic impact on Safeway's profitability and there is limited ability to recover those costs through member growth.
Regulatory Burden: Safeway is required to comply with regulations at a provincial, federal and international level, with new regulations being added every year. When IFRS 9 and CRS come into effect, Safeway has no ability to add
these to their banking system, which means that Safeway will need to add extra resources to payroll to manually process the requirements.
Added to the manual monitoring and reporting currently required for AMLTF and the monthly and quarterly reporting to CUDGC, the new requirements will have an additional negative impact on the credit union at several levels.
Regulatory issues are expected to keep increasing, with AMLTF changing almost every two years and always significantly increasing the amount of monitoring required. Safeway will be forced to engage outside resources at a substantial cost in order to meet the requirements.
Future Growth: In order to ignite the engines of growth, Safeway will need to look past its historical bond and invest in the creation of a broader, more universally appealing brand. While this activity is possible, the Board and Management Team have come to the realization that other credit unions, including Servus are already well positioned to accomplish this. Partnering with Servus is a more cost-effective option to provide members with greater value earlier than what the Safeway Credit Union could accomplish on its own.
Profitability: Safeway will findit increasingly difficult to remain profitable due to their size, the number of staff Safeway must maintain to provide member services, and the narrow spread on its margin.
Succession Planning: It has been determined that having the majority of Safeway's corporate functional knowledge held by the General Manager supported by a small group of senior staff is a risk in that if the General Manager should suddenly no longer be available the branch would be forced to operate without its key source of regulatory, lending and policy knowledge, creating the potential for long-term risk.
Premises: The current leased premises of the credit union are listed for sale creating uncertainty for the future of the credit union. The current lease expires December 31, 2018.
Plans to close the Safeway branch will be launched, subject to a successful membership vote and arrangements will be made for Safeway members to transition to the Servus branch of their choice. Safeway employees will be provided with the option to transfer to the branch of their choice. Consideration is also being given to having the entire Safeway employee group transition to the same branch – at least for the period immediately following the amalgamation – to provide Safeway members and employees with the comfort and confidence of their existing intact team. Both Safeway and Servus boards have committed to no involuntary staff layoffs.
Both Safeway and Servus have a strong foundation of loyal members and talented staff and the areas served present growth opportunities for the future. By joining Servus the Safeway Credit Union members will have access to a wider range of products and services and access to management expertise that will create immediate benefits for members. The two credit unions will generate greater economies of scale that are increasingly important in the current and emerging competitive environment.
As a full-service credit union with branches across the province, Servus is able to offer Safeway's members more service options, no matter where they are in the province. Servus is also able to offer Safeway members a complete and competitive range of products and services – retail, commercial, agricultural, wealth and insurance products and services anda full spectrum of delivery channels.
All Safeway members will become members of Servus Credit Union Ltd., common shares and retained earnings will be transferred to Servus Credit Union Ltd., at par.The current Servus Credit Union bylaws will be adopted.
If approved by the Safeway members this amalgamation will take effect on June 1, 2018 with the existing Servus Credit Union board members remaining. Staff will convert investment and credit products into a comparable product that will mirror the setup, rates, maturity dates and interest payments where possible. Upon expiry, the products will either be closed, or renewed into the closest like-product in the Servus portfolio.
As we wrote to you previously, we are all deeply attached to our credit union and proud of its history. After much serious consideration, analysis and debate your Board decided the best option to meet the needs of members is to take our recommendation for an amalgamation to you for a vote.
We hope you attend this important meeting on the future of our credit union and we look forward to seeing you there. Please RSVP to 403-261-5681 or Cliff Roberts, General Manager
Sincerely,
Board of Directors
Canada Safeway Limited Employees Savings And Credit Union Limited