Compromising mutual ownership to raise capital

In the UK, the Co-operative Bank is faced with a capital shortfall and its answer to fill this need is to partially float on the stock exchange.
 This idea is not new in the mutual world, and has happened in other countries . . .

Crédit Agricole
With outstanding loans reaching €485 billion at the end of 2012, Crédit Agricole remains France’s leading financier, according to the bank’s Chairman, Jean-Mare Sander.

In 2001, the co-op was partially demutualised to enable the bank to expand abroad. It now has a hybrid model with local banks owning
the majority of the regional banks’ share capital and 56.3 per cent of share capital held by the 39 regional Banks through a holding company.

Over the past year, it has improved its solvency ratios by reducing its risk-weighted assets. Crédit Agricole Group, formed of Crédit Agricole S.A. and the Regional Banks, will, under the new Basel 3 standards, have a Common Equity Tier 1 ratio in excess of 10% at the end of 2013.

Crédit Mutuel
France’s fifth largest banking group, by equity, and the third largest retail banking franchise, remains a mutual, but it has a subsidiary, Crédit Industriel et Comercial Group, which is listed on the Paris stock exchange.

In 1998, the subsidiary was privatised and the corporate structure reorganised. The bank is now a public company, with more than 97 per cent of shares controlled by the Crédit Mutuel Group.

The 7.3 million member shareholders acquired co-op shares in local banks. Although it needed government support to cope with the crisis, Crédit Mutuel repaid the bailout in 2009.

Raiffeisen International
Austria’s third largest bank and a leading universal bank in Central and Eastern Europe, Raiffeisan Bank International AG, has more than 2,200 independent banks and their branches, and employs more than 23,000 people.

It has a capital ratio of just 6.9 per cent, and it was bailed out by the Austrian government, which needs to be repaid.

The 2,200 co-op banks hold 88 per cent of the Raiffeisen Zentralbank Osterreich/RZB Group’s shares. The RZB Group owns a 70 per cent stake in the public Raiffeisen International. Reiffeisen has made a profit every year since it has been listed on the Vienna stock exchange in 2005.