Leaders set up future priorities for co-operative banks

Panellists tried to identify priorities to address challenges facing co-operative banks, at the third round table of the 5th Convention of the European Co-operative Banks.

Panellists tried to identify priorities to address challenges facing co-operative banks, at the third round table of the 5th Convention of the European Co-operative Banks.

The discussion began with some preliminary remarks made by Veronique McCarroll, Partner at Olivier Wyman. Ms McCaroll is one of the authors of the study analysing the state of co-operative banks across Europe. The study, conducted by Oliver Wyman is entitled “The Outlook for Co-operative Banking in Europe 2012”.

Referring to the results of the report, Ms McCarroll said: “Co-op banks have been doing relatively well, compared to the banking industry probably because the majority of them were not exposed to some of the activities that caused big failures.” She added co-op banks have also shown a more stable earnings profile.

MEP for Green Party, Sven Giegold also agreed that co-operative banks have proved to be more resilient than commercial banks. “One of the imminent challenges and opportunities is to make the maximum out of the crisis and built on the success of co-operatives, the only banking group that didn’t need the support of the state in Germany”.

Mr Giegold added it is essential to prevent co-ops from becoming a victim of new regulations proposed by the Basel Committee, the European Commission or the European Parliament.

Asked what are her thoughts on the International Year of Co-operatives, Dame Pauline Green, President of the International Cooperative Alliance, said the movement must retain the cohesion gained throughout the year by “defending what we’ve got and promoting it”.

Monique Leroux, Desjardins’ CEO, spoke of the need to work in partnerships and said co-ops should try to promote themselves more.

“Humility is good, but it needs to be organised humility. It would be fantastic if our members could be more vocal, could be the advocates of what we do,“ added Ms Leroux.
Sven Giegold also said that co-ops must try to pull out more resources. He proposed a “naming and shaming” system to increase transparency and attract more members.

A key challenge for co-operative banks is, in Mr Giegold’s view, the fact that some banks are too big to fail and benefit from finance. He said co-ops should punish the part of the sector which does not act responsibly and use regulation to make up for the fact that some are not playing by the rules.

Speaking on behalf of Commissioner Daniel Calleja, who was unable to attend the Convention, Mr Apostolos Ioakimidis said co-operatives that remained faithful to co-op values have faced the crisis better.

Principal Administrator in the European Commission, Directorate General, Industry and Enterprises Unit, Mr Ioakimidis said: “I represent the Commission, a policy maker, and we understand more and more that co-ops thrive in markets, not only banking but food retail, education, housing, green energy, communication.

“Policy makers have neglected co-ops for a long time. Even co-ops neglected themselves. The crisis is a really good starting point for co-ops to start showing their importance.”

Present at the 5th Convention, Paul Flowers, the Chair of the Co-operative Banking Group said from the audience, co-operative banks have a “unique story to tell.”

Added Mr Flowers: “We should be proud of who we are and what we offer and recognise that all of our customers always rate us better in terms of the service we offer.”

Dame Pauline Green agreed with the Chair of the Co-operative Banking Group. She said: “What we are selling when we talk about the co-op brand is a different way of doing business, a way that puts people at the heart of its decision making. We don’t need to be one global brand because our strength is this monolithic structure.”

Another panellist in this round table, Masataka Miyazono from Norinchukin Bank of Japan said mutual aid has been key focus for co-operative banks following in the earthquake’s aftermath.

He continued: “Through the IYC we firmly recognised the importance of sending out information about the principles of co-operatives. Many people approached us saying they are interested in what we are doing.”

Arnold Kuijpers, Director Corporate Affairs of Rabobank said the co-ops banks have raising concerns over the increase of capital to maintain the level of business. He said: “When new regulation is being drafted by officials that have mainstream banks in mind, they don’t think about co-operative banks.”

He added the UN provided a platform for co-ops to expose themselves around the world, but co-ops are “a bit too modest.”

“Many co-operators have to understand the outside world is interested in them. They need to interact more actively."  He explained that co-operative banks have a different customer orientation from the one of commercial banks. “Co-operatives really are different,“ added Mr Kuijpers.

Future Priorities

Asked to say what are the main priorities for the coming year, the panellists spoke of the need to keep up the momentum of 2012. Sven Giegold said that co-ops need to stick to their principles. He explained: “The more you look like commercial banks the less credible you are.”

Speaking of future priorities, Arnold Kuijpers said more regulation is not necessarily needed if it is not better. He explained that regulators are taking a huge responsibility in trying to regulate, yet too much and too detailed regulation can cause confusion, and this could have negative consequences.

Mr Miyazono said a key priority is to ensure the co-op banking sector plays a key role and are regarded as “standards" in terms of banking and not as "exceptions”. “There are many people up there who needs co-ops and co-op banking,” he said.

Dame Pauline Green said a key priority for the global co-operative movement is to maintain the cohesion it has gained throughout the International Year and keep up the momentum whilst securing partnerships with institutions and organisations such as the EU or the UN.

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