Do’s and Don’ts in Credit Union Mergers

Credit Union Mergers

The landscape for credit unions in Ireland has changed dramatically in recent years.


We had the economic downturn and problems worldwide in the financial systems, resulting in a massive reduction in income from investments, and a huge reduction in lending income which currently has not picked up sufficiently to bridge the investment income gap.


Regulations, legislation, risk, compliance – they have all put pressure on credit unions for investment in resources, training, systems, changes in working practices, and management time and attention.


Changing members needs and opportunities offered by technology and new services have also required credit unions to change.


As the saying goes, it’s adapt or die.


In this context, the need for consolidation in the sector is high on the agenda of many credit unions and third parties in the sector.


But one should take time to consider if this is the right thing for the credit union, and if it is strategic, how do you ensure that it will work post-merger?


The research on mergers in general shows that the failure rate for mergers is high, so they are not a panacea, and many do not achieve their stated objectives.


The critical stage, in the first instance, is the pre-merger discussions, the due diligence, the actions that should be taken pre-merger, and the detailed plans that should be agreed upon for the immediate post-merger period.


There are many useful lessons to be learned from those with merger experience.


Credit Union Mergers

Below is a compilation of some of the critical Do’s and Don’ts in Credit Union Mergers.



  1. Assess the management team. What are their skills and competencies? What do they bring to your organisation? How well will they adapt? What is their style and approach. The best way to look at it is to look at their achievements in the past few years. If they haven’t done marketing in their area in the past 5 years, they won’t start it when they merge because it is now part of the job description in your credit union. Be realistic. Many managers don’t adapt well and fail to make the transition.

  2. Assess the culture, and the competency, capability and willingness to change. What is the culture like? This seems nebulous, but it is anything other than nebulous after a merger when you find that staff and management are resistant to change, don’t really buy in to the merger, sometimes even resent it, and begin to show their true colours by bringing in or going to their union about everything, or not being willing to change their way of working or patterns of work, and so on. There is nothing nebulous about any of this if after a merger you find yourself dealing with these issues. Use as many ways as possible in the pre-merger period to assess, in as deep a way as possible, this area.

  3. Talk to all staff pre-merger. It is not sufficient to talk to the Board and Manager. They have their own agenda, their own perception of things, and in some cases, they will simply shield you from the reality. You may not be fully informed of everything and thus a very rigorous HR due diligence is required. As some credit unions have discovered, staff may not fully or accurately informed, and you may be left in a situation post-merger which is different to what was understood from your discussions beforehand. You need to talk to all staff who are likely to transfer, 1-1, to assess style and approach, to get underneath the skin, to really understand their role, how they have adapted and changed in recent years, and to map out with them what it will be like after a merger and what their role will be. If the transferor does not feel this is appropriate, think twice!

  4. Assess the staffing and management levels and numbers required, and don’t TUPE across staff and management that are not needed post-merger. Why take the pain of transferring staff and running severance programmes after a merger. Our view is that in credit union situations, the transferor should get their house in order and right size pre the merger. This is in compliance with legislation. After a TUPE, it is possible also, but with attendant risks and difficulties for the transferee. These are all difficult discussions for every credit union, its Board and management, and no one wants to see people losing their jobs, but credit unions have to be sustainable, and adding a possibly over-staffed credit union to your credit union and hoping to deal with it after a merger is not a good business choice.




  1. Do a merger because everyone else is doing it or because other third parties want it. It has to be right for your business, it has to fit afterwards. It can’t be cost increasing. It has to bring value. Where is the value creation from the merger, and what is the cost of acquiring that? After the merger, you could be left ‘holding the baby’. Fixing problems in any organisation is not easy. It will consume massive amounts of management time and attention which will divert you away from your core business

  2. Transfer staff that are surplus to requirements after the merger. Don’t take on staff that are clearly not going to be required after a merger. If there are too many Tellers based on current footfall and transaction levels, or too many loans officers for lending volumes, don’t believe that because of your superior marketing capability that these volumes will lift soon after the merger and all the staff will be working at full capacity again. 
  3. Assume that staff or management will change after the merger. Test that assumption before the merger! Set out what you will need staff and management to do, if retained, after the merger. How will their roles be different? What will be their change in hours? What will the new opening hours be? What systems will they be working on? What way will the procedures and practices change? If staff and management don’t agree before a merger to changes that you know you want to bring about, then they won’t change after a merger, at which stage they will be secure in their positions having transferred under TUPE. In the discussions that happen beforehand, staff should be at their most flexible to change; afterwards maybe too late. 
  4. Assume that management can adapt easily into a new organisation structure and adapt to changing role requirements after the merger. Our experience is that managers and others in the management team may not adapt so easily. There is also a case that there will be an over-supply of management and there should be a reduction at this level prior to the merger. If managers and others in the management team are going to be transferred, there needs to be good reason for it, and the post-merger role, competencies and capabilities needs to be mapped out and agreed pre-merger.
  5. Do a merger where one side benefits greatly and the other takes the risks. Check and address the inequalities and the risks at the pre-merger stage and sort them out. Balance up the sheet. 
  6. Harmonise or equalise pay and conditions after a merger. Ring fence or red circle the T&C’s of the incoming party. There is no obligation in law or in IR terms to harmonise. Too many mergers are cost-increasing for the transferee and become even more so when parties agree to equalise pay and conditions for everyone. It makes no business sense for the transferor staff to get improved pay and conditions just for transferring. Of course, having staff on two or more different sets of pay and conditions is awkward to manage, but that’s better in our view than cost-increasing harmonisation.



Need help in this field? We’ve helped many of the biggest credit unions in the country in this area. Please contact us or Call 01 866 6426 for more information on how we can help.