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“In addition, the amendment enables credit unions to more effectively manage their risk by diversifying their lending portfolios,” a spokesperson for Ontario’s Ministry of Finance said in an email. “This change provides necessary clarity and reduces red tape for credit unions and banks to improve liquidity for Ontario capital markets and consumers.”

Previously, Ontario credit unions had been allowed to participate in loan syndications led by their fellow provincially regulated credit unions, but not by federally regulated banks or credit unions.

Ontario was the only province in Canada with this restriction, making it unique, according to Martha Durdin, president and CEO of the Canadian Credit Union Association.

“It put Ontario credit unions at a disadvantage,” Durdin said. “Because of the relative size (of credit unions), participating in syndications rather than leading them is (an) attractive tool for them, so that they can pursue larger clients.”

Durdin gave the example of an agricultural client of a credit union seeking to buy a new piece of land worth millions of dollars, a loan that the credit union might not be able to fund without joining a syndicate.

“So it hurts credit unions, hurts business, if they couldn’t do it,” she added. “And it would force businesses and customers to only work with the larger banks, which … impacts competition.”

The prohibition also blocked Ontario credit unions from participating in loans led by Concentra Bank, a lender that is owned by credit unions and that provides financial services to them.