Iqaluit (Sep 13/04) - With the Bank of Montreal set to close the doors on its Iqaluit branch in November, Nunavut Tunngavik Inc. (NTI) president Paul Kaludjak sees a real need for a banking institution to serve the little guy.

"It's really important because we continue to lack proper services to our beneficiaries in communities," Kaludjak said.

An effort to start a territory-wide credit union in the mid-'90s failed because the $6 million required could not be raised.

Kaludjak says cash may still be a problem, though he thinks the political will may eventually bring the idea into being.

"I wanted to see something materialize this time around," the NTI president said.

NTI's research has been going on for the last year and two of the ideas being considered are a credit union and a trust company.

Atuqtuarvik Corp. is considering these options as well as the possibility of opening a Nunavut-based bank.

A full report is expected to be delivered at NTI's general meeting in Baker Lake, Sept. 14-16.

Rob Martin, a spokesman with the Credit Union Central of Canada, sees benefits to starting a credit union because of Nunavut's small potential deposit base and population.

"It keeps the money in the community, whereas a bank or a trust company might not do that," Martin said.

The difference between credit unions, trust companies and banks is in the ownership structure. In a credit union, members buy shares which give them a level of control over the institution.

"Basically you do your banking at the credit union, but you also own it," Martin said, adding the focus of a credit union would be on community development.

Trust companies and banks are owned by one person or a small group of people, with no guarantees on where the money goes.

"They can leave if it's not very profitable," Martin said. "There's no way of really pinning them down."

Legislation passed within the past five years would allow for larger credit unions in some provinces to set up branches in Nunavut, Martin said, though the level of control given to the territory is something that would have to be negotiated.

More important things

But Rick Doucet, senior administrative officer for Iglulik, thinks there are more important needs than a territory-wide financial institution.

"I think what everybody needs is a lesson in budgeting, and I really believe that it might be a waste of time to pursue a credit union," Doucet said.

Though if an organization established itself in small communities where banks refuse to go, Doucet sees that as an advantage.

Other communities agree with the need for a physical presence.

"If the bank is in town, that would be good, but when it's out of town, it's pretty hard to save," said Jayko Neevecheak, mayor of Taloyoak. "It could try to get more local businesses going, that would be good."

Without a bank in Iglulik, Doucet estimates about half of his employees do their banking through ATMs, on credit cards or with cash.

Kaludjak hopes any institution established by NTI and potential partners would be present in the smaller communities, though he is still waiting to hear whether the idea makes financial sense.

Martin sees the Arctic Co-op system as an important part of making a Nunavut-wide presence possible.

"If a credit union system could possibly piggy back on a system like that, then I think it wouldn't be a problem," he said.

NTI's consultants will also provide it with information such as the legal hurdles of setting up a financial institution.

But if the Government of Nunavut updates the Credit Union Act established for the NWT more than 10 years ago, Martin said he does not foresee any major problems.

The possibilities are many, Martin said, but any option must be supported in the communities for it to work.

Howard Dogach, president and chief executive officer of Credit Union Central of Ontario, the central bank for the province's credit unions, says the government should also be involved.

"You need to go to people like the local government and say 'listen, how much money are you willing to deposit in the credit union in order that it can have a chance of succeeding?'"

But the territorial government has been cautious in outlining what its commitment would be on such a proposed project.

Minister of Economic Development David Simailak has said the government will look at future funding proposals, but won't commit any money for the time being. Calls to his office were not returned by deadline.