Credit Union Investments 2017

Top 10 deposit-takers by % of credit unions (2016-2017) 

Comment: 

This chart shows the percentage of the 182 credit unions in our sample who use each bank. Nine out of the top ten banks gained credit union customers in 2017 including The Co-operative Bank who were used by 64% of credit unions. Nationwide gained market share much more rapidly, doubling the number of credit unions using their services from 19% to 38%.

This increase appears to be correlated with the increase of credit union deposit accounts generally in the period. The average number of accounts per credit union has increased from 5.4 in 2016 to 5.7. In 2017, it appears that these extra accounts have mostly been opened with the deposit-takers which are already widely-used within the credit union market.

 

Top 15 banks by credit union deposits (2016)

 

 

Comment: 

This pie chart shows the percentage of credit union funds (£330 million) each bank held in 2016. The Co-operative Bank held over a quarter of the credit union markets deposits.

Top 15 banks by credit union deposits (2017)

Comment:

 In 2017 the picture shifted dramatically. The Co-operative Bank faced significant and well-reported financial issues and represented a considerable risk to the sector due to the high concentration of the sector’s funds which were invested in the bank. This scenario is what led to the Prudential Regulation Authority reforming the credit union annual return and requiring credit unions to report investment data.

Due to their financial issues The Co-operative Bank were forced to cut their interest rates to as low as 0.03% for a significant period of time. The combination of poor rates and negative press led many credit unions to move their deposits elsewhere and the proportion of credit union assets held by The Co-operative Bank fell from 26.3% to 14.5%.

Top 15 deposit-takers by credit union funds bar chart 

Comment: 

We’ve also consolidated the two pie charts above into this bar chart for easier comparison. Almost every other major deposit-taker gained assets as credit unions diverted funds away from the Co-operative Bank. Cambridge and Countries saw the biggest percentage gain from 2.5% to 5%. Nationwide saw the biggest gains in absolute terms taking an additional £13 million in deposits.

 

Top 10 deposit takers by % credit union accounts

Comment: 

This chart shows the percentage of all the credit union accounts with each deposit-taker (out of 1039). Whilst the percentage of credit unions (1st chart) using The Co-operative Bank has risen, the total number of accounts has declined as credit unions move their matured investment accounts. The number of accounts includes credit union corporate accounts which are generally more stable due to the additional complexities of switching the credit union’s bankers.

 

Top 10 deposit takers by average credit union balance (10+ accounts) 

 

Comment: 

These are the deposit-takers that individual credit unions are placing the largest deposits with. We have only included deposit-takers that have at least 10 credit union deposits. The top four deposit-takers on this chart are from relatively large banking groups, however, some smaller deposit-takers are make the top 10 due to the interest rates on offer.

Top 10 deposit-takers by average term of account (10+ accounts)

Comment: This chart shows the banks where credit unions are tying up their funds for the longest. Unlike the top 10 banks for average balances, the top two spots are taken up by challengers to the larger deposit-takers likely due to the increased yields for tying up funds with these deposit-takers.

In addition, these banks do not offering any Corporate Banking or instant access banking which will pull down the average term for some of the other deposit-takers.

Liquidity

Comment

The two pie charts above show that credit unions tied up slightly more of their funds in 2016 than 2017.