Thousands of vulnerable residents have been reassured their savings and loans with Bristol Credit Union (BCU) are safe after a merger was revealed.

The not-for-profit social enterprise, which offers cheap finance to people in times of crisis to help them keep a roof over their heads and interest-free loans to get homeless people into accommodation, has struck a deal to amalgamate with neighbouring Wyvern Savings and Loans Credit Union.

Bristol City Council cabinet members gave their backing for the move on Tuesday, November 3, which is required because the local authority is an investor.

Last year, the council ploughed £500,000 into BCU so it could provide more loans for householders in the most deprived areas of the city who might otherwise borrow from high-cost lenders.

Deputy mayor Cllr Craig Cheney told the remote meeting: “In light of Covid this is more important than ever, and credit unions supplying loans to people at risk from homelessness is an example of how they are investing in those in the most need.

“There are about 2,800 BCU members who save with the credit union, which is nearly £5million-worth of savings recirculating locally, supporting our regional economy.

“The low-cost loans also benefit the area with more money staying local, thereby supporting independent local businesses and trades.

“BCU has supported over 500 independent businesses and 1,500 customers while saving members over £2million a year in interest compared with high-cost loans.”

Cllr Cheney said the voluntary merger would expand the organisation’s geographic area but that it had ensured the proposals “will not impact on existing members in any way”.

He said: “BCU has committed to maintaining a material proportion of the merged loan book to support Bristol citizens.

“Subject to financial due diligence, I am asking cabinet to support the merged union and wish them every success.”

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A report to cabinet said BCU had more than 15,000 members – comprising those with loans and savings – of which over three-quarters were in Bristol, with most of the rest being elsewhere in the West of England.

Its current loans to customers total more than £6.5million, of which £4.4million are to residents and businesses in the city.

The report said the merger would make the new credit union “financially healthier” and potentially increase the amount of money available to borrow, although there was a risk the focus could move away from Bristol and that members and depositors could be lost.

“The investment in BCU allows the credit union to expand and grow, providing an increased number of low-cost loans for those citizens across Bristol who in times of crisis need funds to bridge those periods of crisis,” it said.

“Examples of these loans include funds to minimise the risk of a loss of tenancy or home that could lead to consequential impact on individuals and families leading to a greater burden on the wider public sector.”

BCU’s other investors whose approval is required have already agreed to the changes.