Co-operative banks are key players in securing sustainable growth

Co-operative banks are committed players for sustainable and equitable growth, said the panellists taking part in Round Table Two at the 5th Convention of the European Association of...

Co-operative banks are committed players for sustainable and equitable growth, said the panellists taking part in Round Table Two at the 5th Convention of the European Association of Co-operative Banks.

The panel included representatives of co-operative banks, as well as financial experts and EU officials.

Gerhard Stahl, Secretary-General, European Committee of the Regions, said it is essential to recognise the severe situation in which EU’s economy finds itself.

Gerhard Huemer, Director of Economic and Fiscal Policy at European Association of Craft, Small and Medium-sized Enterprises (UEAPME) said it was local de-centralised decision-making that makes co-ops so different.

He highlighted that “in regions where co-op banks exist, there is higher stability”.

Rym Ayadi, Senior Research Fellow  at the Center for European Policy Studies, said clear evidence shows that co-operative foster regional economic growth. She added: “we need to identify which are the business models more linked to sustainable finance and sustainable development."

Augusto dell’Erba, EACB Board Member and President of Credito Cooperativo, said the real value of co-operative banks is social cohesion. He referred to co-op banks as a real intermediate in the local economy.

Étienne Pflimlin, Honorary President, Confédération Nationale du Crédit Mutuel also agreed with Mr dell’Erba. He said the democratic mode of organization increases mutual responsibility and understanding within co-operatives.

He gave the example of Crédit Mutuel, where more than 85% of lending decisions are taken within the 2,000 local banks, making it possible for customers to be better informed and to gain more trust in their bank.  He said customers “want co-op banks to add as an intermediate between their needs and the financial world.”

Mr Pflimlin added 30 per cent of FMI funding comes from co-op banks and revealed that in France co-op banks take care of 85 per cent of the real economy. He further emphasised that co-op banks don’t exclude people with problems, but help them to solve them, helping them to cope with the crisis.

Étienne Pflimlin said co-ops have a tradition of co-operative social responsibility. “When you give people power they get more involved and are more responsible,” he said. Augusto dell’Erba and Rym Ayadi also agreed that co-ops have social responsibility embedded in their structure. Mr dell’Erba said that the 400 co-op banks in Italy have a feeling of responsibility towards the local society.

The panellists highlighted the fact that citizens have lost trust in the financial system.

Jeroo Billimoria, Founder of Child Finance said young people are the future of co-operative banks. She said that from a business point of view-having a youth customer base is essential and that co-ops should focus more on this, particularly now that youth unemployment is at its highest. Étienne Pflimlin added that co-operative banks will give assistance to unemployed. He also said micro-finance services are important: “they are like micro-surgeries,” he said.

A discussion followed on the role of co-op banks in micro-finance and granting capital to young entrepreneurs.  Augusto dell’Erba said co-ops should refer back to their historical role.

He continued: “We have taken distance for the reason why we set up co-ops – self-help to counter poverty in Europe. It is emerging again as a result of distribution of resources less fair because of speculation. We have to focus on the people who need to be helped not from a philanthropically point of view, but in micro-finance."

Mr Pflimlin also highlighted that thousands of projects exist, but cannot be implemented, however they could be implemented with the help of co-op banks.

Rym Ayadi also added that the “role of co-ops in development goals was important not only in Europe, but also outside of Europe.”

In their concluding remarks, the six panellists said the main priority for the future is extending the level playing field for co-op banks. Mr dell’Erba said it is essential for EU legislation to give enough significance to co-op banks. Dr Ayadi added that in the current context, when old models are questioned, co-ops can lead the way for sustainable banking for the future.

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