The European Association of Cooperative Banks (EACB) hosted a webinar on 17 July exploring the role of co-operative banking in times of crisis.
The event gathered speakers from across Europe for a discussion centred on the analysis and findings of the recently published book, Of Banks and Crises.
Co-writer Jacques Beyssade, general secretary of French banking group Groupe BPCE, opened discussions with comments on the book’s major themes.
Beyssade outlined common features of co-op banks: they are often locally based and set up in response to a social need, are more resilient than other kinds of financial institutions, and customer-focused by nature. There is alignment of interest between customer and shareholder, as they are one and the same.
“These common features of co-operative banks bring a lot of benefits in periods of crisis,,” said Beyssade, “because they are, as a result of their legal structure, typically more solid than other banks.”
Beyssade added that these benefits are not sufficiently recognised by regulators, “who tend to think around one-size-fits-all kinds of models… the way you should judge and therefore supervise a commercial bank [compared to a co-op] is not necessarily exactly the same”.
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Beyssade highlighted a need for proportionality when it comes to the size and business model of different financial institutions.
A panel discussion followed, featuring contributions from Edoardo Rulli, policy officer at the European Commission, Małgorzata Iwanicz-Drozdowska, professor at SGH Warsaw School of Economics and CEO of Krajowy Związek Banków Spółdzielczych (KZBS), and David Murano, deputy CEO and CRO of Caja de Ingenieros.
The discussion was moderated by Mike Velthaak, senior advisor of Rabobank’s management board.
Panellists first discussed how the impacts of the 2008 financial crisis and the pandemic, and the public responses to these crises, were felt disproportionately by marginalised groups across Europe.
The Spanish recession resulted in a “big reputational blow” to the financial sector, said Rulli, but this was less so for co-operatives. “From 2009 to 2012, about 41 banks and savings banks disappeared,” he added, “but no co-operative bank disappeared. We had a very different sort of business and risk profile.”
The increase in banking regulation following the 2008 crisis was also explored by the panel, including the creation of the Banking Union and the Single Rulebook.
Iwanicz-Drozdowska said that the sector is now “overburdened with regulations”.
“There is a lack of proportionality in most of these regulations,” she added, “so Polish co-operative banks really complain about the scope of the regulations. [It’s a] real challenge to fulfil all the regulatory requirements as a small bank with a small number of employees.”
The panel went on to discuss the main challenges ahead for the financial sector, including political polarisation, digitalisation and the green transition. The role of co-op banks in responding to these challenges, Beyssade said, is to do “what we’ve done over the last decades and centuries – i.e. providing the means to people to build and finance their future, whatever their future is”.
When it comes to climate change, said Beyssade, this could look like supporting homeowners as they reduce carbon emissions from their houses, helping farmers move towards greener practices, and providing the means for individuals to purchase electric vehicles.
“This is the role we’ve always played, and we need to go and play it,” he added. “[If] we do that, we will not only gain market share and fulfil the expectations of our customers and co-operative shareholders, but also help our countries overall.”
