Characteristics of the co-operative banking model

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Deeply anchored within the local economy

Co-operative banks are key actors in the European society. They provide access to finance at local level and are widespread even in remote areas of the continent. More than 59,000 outlets offer close and unique relationships with customers. The European co-operative movement also reflects the tradition of responsibility and social cohesion since their creation in the 19th Century. Their wide-ranging networks oftenmake them the main employers and taxpayers in their own regions. Co-operative banks employ approximately 749,000 people in Europe.

Property of their own members/customers

Clients can become members/owners of co-operative banks with relatively small investments. As a result, they have a direct say in the business and are involved in the governance, strategy and risk management processes. The core business of co-operative banks is value creation for their members and a long-term relationship of trust, opposed to the profit maximization approach of the mainstream banks.

One person = one vote

Co-operative banks bring together modernity, innovation and the traditions of the founding fathers of the movement, like Raiffeisen and Schulze-Delitzsch. They comply with the banking and co-operative legislation of their respective countries, with the key principle of one person=one vote, found in the EACB Statute. Their unique stakeholders structure brings about efficiency and sound governance: members control the co-operative by exerting checks and balances at each level of the business. This minimises the organisation’s risk, identifies creditworthiness and gives immediate response to customers’ needs.

Sound business practices and resilient structures

Co-operative banks generally have a high level of capitalisation, stable incomes from retail business and a diversified credit portfolio. Credit ratings reflect this very well; ranging between AA and AAA for the largest co-operative banking groups in Western Europe. Stakeholders banks are able to face the challenges of the new post-crisis environment because their business model responds to the present needs and expectations.

Financing the real economy

Co-operative banks contribute to stability thanks to their proximity to their clients. They continue to provide credit to their clients and members in good and bad times. They are key players in financing the real economy: the households and the SMEs on our territories. In Italy, France, Germany and the Netherlands, co-operative banks’ market share in loans ranges between 25% and 45%. In those same markets SMEs represent between 20% and 50% of the total client portfolio of co-operative banks.

Leading the way in the field of social responsibility

Co-operative banks foster self-help, responsibility and solidarity. They emphasize the common good of society. They were historically founded to improve access to finance for their members, who would otherwise have had limited access to finance at reasonable rates. As a result, co-operative banks take part in a range of schemes, such as microfinance and financial education of long-term unemployed personnel. They also traditionally foster the development of their communities through cultural sponsorship and responsible citizenship. Co-operative banks are among the market leaders for Socially Responsible Investment (SRI) products such as funds and savings accounts. Nowadays, green finance is gaining an increasing importance; customers can contribute to the preservation of the environment through a variety of investment solutions.

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