With a 23.3% market share of French household deposits and total assets of €1.72tn, Crédit Agricole is France’s second largest bank.
Perhaps less known is the fact that the bank is a co-operative. Through a network of local credit co-operatives and a number of subsidiaries, in France and abroad, it provides retail, corporate, insurance, and investment banking services.
We spoke to Pascal Delheure, deputy general director of Crédit Agricole’s national federation, to learn how the group has sought to stay loyal to its co-operative roots while remaining competitive in a tough market.
“Crédit Agricole was born out of the need for finance within the agricultural sector,” he says. “It developed locally, based on geographical proximity and the will of the people to empower each other and create solidarity among themselves to finance agriculture.”
The bank emerged at a time when the agricultural sector struggled to find affordable credit. In 1884, France passed an act allowing freedom of association, breaking the Jacobin centralised tradition. On 5 November 1894, members of farm unions were authorised to set up Crédit Agricole’s local banks.
“Our values have always been community, responsibility and solidarity. They have not changed but the world has,” said Mr Delheure.
The value of community is twofold, bringing a geographical presence in local communities and fostering relationships with people who lived in them. With 39 regional banks, 27 million retail customers in France, Crédit Agricole serves a wide range of customers, including farmers.
Mr Delheure says the bank still strives to support people and help them develop, something determined by its values of responsibility and solidarity. It has helped the agricultural sector during multiple crises as well as helping it keep up with the rapid changes of modern society. This includes developing financial tools to help people deal with issues such as job losses or restructuring.
“The three values are still current. Combining our three values is our raison d’être. We are still serving a purpose,” he said.
Looking at the wider picture, confidence of customers in the banking sector is falling but Mr Delheure says the image of Crédit Agricole has “not been deeply affected by the financial crisis in the USA”.
“This is due to the financialisation of credit and the way in which finance is given in the Anglo-Saxon states, which is different from how things are done in the French banking system,” he says. “Credit co-operatives are not speculative banks, they collect money. Our co-operative model ensures there is a real benefit for members who are also represented in governance structures.”
Due to its approach and local roots, Crédit Agricole has not suffered to the same extent as regular banks during the crisis, nor did it require a state bailout.
“We are a group of 39 banks, which function on a decentralised, co-operative model,” says Mr Delheure. “Executive management is separated from the board of directors, which is made up of member representatives of the local territories. This makes it safer and more responsible than banks with independent directors.”
Since 2003, Crédit Agricole has had an ethical policy, developed to ensure common standards across its institutions.
The Crédit Agricole Group includes a network of regional co-operative banks and Credit Agricole SA, a national structure whose business lines provide a wide range of solutions to the local network. The regional banks own 54% of Crédit Agricole SA. This hybrid model enables it to raise capital.
“We thought that it was important to have an ethical policy for our organisation. In response to the 2008 crisis, we wanted to show our identity and social responsibility,” says Mr Delheure, adding that Crédit Agricole does not sell its members’ data. Similarly, the bank chose not to operate in countries that do not exchange fiscal information to avoid tax evasion.
Figures published on 3 August revealed that Crédit Agricole’s second-quarter net profit had grown 6.4% to €1.44bn (£1.28bn). The bank is the world’s largest co-operative by turnover, according to the World Co-operative Monitor.
“It is not something we necessarily pride ourselves on,” says Mr Delheure. “What is important for us is distinguishing what that says about us – that we are a co-operative bank. Our governance system is our great strength and we defend this. The one member/one vote principle; our local presence and representing our members determine our way of working.”
He adds: “If we do not perform well as a bank, that does not mean anything for the customer. Our mutualist nature determines our approach and behaviour. It guides our actions. For example, we are open to all clients, we do not choose them, and we enable them to fulfil their projects and achieve what they want in life. We do not have clients who choose us because we are a mutual bank.
“Being a mutual bank is about maintaining our presence at local and rural level. Our proximity enables us to do so. We have a strong position and we create connections at local level. In a world where everything is going global, our model is local, but it benefits from a local presence.”
To support rural areas, Crédit Agricole developed a network of start-ups across 25 villages, connecting aspiring entrepreneurs with established enterprises. The bank now plans to roll out the initiative to other countries.
“We create wealth within the territory and we stay there,” adds Mr Delheure.
Through its network of 39 regional banks, the co-operative ensures that decisions are taken at local level, rather than in Paris, he says. “We didn’t restructure around the great regions, we have stayed local for the client, this is what it means being a mutual bank.”
Regional banks can also experiment with providing new services. If these are successful, they can be implemented in other territories, as well as nationally.
Does the growing importance of digital services pose a threat to its model? Mr Delheure says Crédit Agricole gives clients a range of digital services while focusing on one-to-one advice and support in its branches.
Last November, it introduced a low-cost online banking service. The EKO service, created to address competition from fintechs and other online financial providers, will provide an account, debit card, mobile app and access to local branches for €2 a month.
The bank hopes the app will help customers improve their budgeting by sending alerts when their account balance is below €20, if they don’t have an authorised overdraft. They will also gain access to other services offered by the bank, such as credit, insurance or saving.
“As a co-operative bank, we have a specific governance model and decentralised approach, but also just because we are a co-operative bank, it does not mean clients will come to us. We need to maintain our local presence, have confidence in ourselves and provide excellent services.”
“Our ambition is being more than a bank. It is in our DNA. Crédit Agricole was set up in France due to a need for solidarity and autonomy, just like other credit co-operatives were set up in Europe around the same time. There is still a need for values. Our model is bottom-up, from local to global.”
Just like Crédit Agricole itself, Mr Delheure feels very connected to his local roots. He joined Crédit Agricole’s local network in Aveyron in 1984, and has been with the mutual ever since. “I am Aveyronnais, French, European and a global citizen, in this order,” he says.