New Cooperative Banking in Europe: Strategies for Adapting the Business Model Post Crisis

259 Pages·2018·3.47 MB·English

by  Marco Migliorelli

NEW
COOPERATIVE
BANKING IN
EUROPE
STRATEGIES FOR
ADAPTING THE
BUSINESS MODEL
POST CRISIS
Edited by Marco Migliorelli
New Cooperative Banking in Europe
Marco Migliorelli
Editor
New Cooperative
Banking in Europe
Strategies for Adapting the Business
Model Post Crisis
Editor
Marco Migliorelli
IAE Université Paris 1 Panthéon-Sorbonne
(Sorbonne Business School)
Paris, France
ISBN 978-3-319-93577-5 ISBN 978-3-319-93578-2 (eBook)
https://doi.org/10.1007/978-3-319-93578-2
Library of Congress Control Number: 2018950363
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F
oreword
The idea of this book came from several meetings I had with professors,
practitioners and students that, like me, are passionate by the theme of
cooperative banking. Many of them advocate that the cooperative model,
axed on membership, democratic governance, proximity and commitment
to social values, represented during and in the aftermath of the Great
Crisis a valuable anchor for businesses and households and that such a
model should be further encouraged. Others claim that cooperative banks
were, in the longer term, not shielded from the drawbacks of the eco-
nomic turmoil and progressively weakened their capacity to generate a
distinctive value proposition, in particular due to the reluctance to adapt
their business model to the changed competitive scenario.
The possibility to enrich this debate is what inspired this collective
work. The convergence towards the joint-stock company model or the
necessity of some deep evolution in crucial aspects of the cooperative para-
digm was often at the heart of the discussions I had on the possible future
of cooperative banking in Europe.
Many changes have already occurred in the cooperative banking sector
in Europe since the explosion of the Great Crisis. The book summarises
the most important ones. Nevertheless, cooperative banking is far from
being in a phase of new maturity. Structural low profitability, stricter regu-
lation and the entrance of fintech companies in the market of banking
services are some of the elements that will keep shaping the market. For
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vi FOREWORD
this reason, the book also deepens the analysis on how the inherent and
unique cooperative values could still be effectively leveraged in the bank-
ing market in the years to come.
IAE Université Paris 1 Panthéon-Sorbonne Marco Migliorelli
(Sorbonne Business School)
Paris, France
P
reFace
The cooperative banking segment in Europe counts more than 3000
banks and has more than 200 million customers. This book, which is in
the form of an edited collection, aims at providing a clear understanding
on how European cooperative banks have been evolving to take into
account the new competitive scenario as resulted from the Great Crisis
blasted in Europe in 2008.
The cooperative banking business model is unique in the financial sec-
tor. Such uniqueness derives from some inherent and indeed intercon-
nected characteristics. Firstly, from the specific ownership structure,
backed by the concepts of membership and democratic governance.
Members have in principle equal weight in the key decision-making pro-
cesses (“one head–one vote”) and no new members can normally be
excluded. Secondly, from the application of the principle of proximity (link
with the territory), which mainly steers the cooperative banks’ operational
activity. Cooperative banks’ operations are in fact focused first of all on
their members and in the area where they are based. Thirdly, from pro-
moting mutualism and the gone-with limited profit-seeking nature. Most
of the cooperative banks have statutory constraints and specific rules as
concerns the distribution of the profits.
Thanks to these characteristics, cooperative banks have traditionally
guaranteed an important countercyclical role and have showed above-the-
average capitalisation levels, in line with a mitigated risk appetite. Despite
that, the cooperative banking system has been put under an unprecedented
pressure as a result of the Great Crisis. Factors such as exceptionally low
interest rates, low profitability generated by traditional banking services
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viii PREFACE
(which are the backbone of the cooperative banking business), the marked
growth in the level of non-performing loans in many countries and the
increasing regulatory burden have produced a significant shift in the com-
petitive scenario, to which many cooperative banks have not yet com-
pletely adapted. For these reasons, it is of extreme interest to observe how
cooperative banks have been reacting in the attempt to preserve their
unique business model and, at the same time, to keep providing credit to
the economy.
To do that, this book is structured in ten chapters. In Chap. 1, Simon
Cornée, Lucrezia Fattobene and Marco Migliorelli present an overview of
the key characteristics of the cooperative banking segment in Europe. To
this extent, the chapter describes the presence of the cooperative banks
over Europe, identifies the key organisational models in use and performs
a structured review of the existing literature on cooperative banking and
relationship lending.
In Chap. 2, Eric Meyer provides an analysis of the performances of
cooperative banks in recent years. He first gives an overview on their main
economic and financial results and then focuses his dissertation on the key
factors that have modified the competitive scenario since the beginning of
the Great Crisis, with a specific focus on low interest rates.
Chapter 3, written by Marco Migliorelli, analyses the lending behaviour
of cooperative banks vis-à-vis commercial and savings banks during and
after the crisis, in order to verify if a specific lending pattern has existed.
This allows the author to assess whether the traditional countercyclical
attitude of cooperative banks during downturns can be confirmed or put
under question.
In Chap. 4, Marco Migliorelli gives an introduction of the banking
regulatory framework in the European Union with respect to cooperative
banks. To this extent, the chapter discusses the main adaptations needed
to the relevant regulation in order to take into account the cooperative
banking singularities and includes an overview of the main impacts of reg-
ulation on the cooperative banking business model.
Chapter 5 presents the major reforms undertaken country-wise in the
cooperative banking sector from the beginning of the Great Crisis to date.
In this respect, Hans Groeneveld presents the case of Rabobank in the
Netherlands, Roberto Di Salvo and Juan Sergio Lopez analyse the recent
reforms occurred in Italy and Francesco Di Leo summarises the other
main national-level initiatives and events.
PREFAC E ix
Chapter 6, written by Eric Lamarque, is dedicated to the discussion of
the cooperative banks’ governance. The author first presents the specific
impact of the Basel III provisions on the governance of cooperative banks.
Then, he analyses the relevant existing governance structures and related
challenges. Finally, he proposes a possible way to introduce innovation in
governance models.
In Chap. 7, Tiphaine Gorlier, Géraldine Michel and Valérie Zeitoun
analyse to what extent the concept of proximity needs to be reinterpreted
in the digital era. To this extent, they argue on how digitalisation can be a
powerful lever to foster a solid relationship with members and clients and
how the cooperative brands, engraved by unique values, can become a
symbolic anchor to keep conveying a sentiment of proximity.
In Chap. 8, Silvio Goglio and Ivana Catturani discuss the key trends
that will keep shaping cooperative banks in the next years and possible
strategic reactions. In this respect, they address the importance of reaf-
firming the role of membership, of leveraging the unique relationship with
the clients, of exploring the possibilities given by digitalisation and of eval-
uating the different concentration options for smaller cooperative banks.
In Chap. 9, Giorgio Caselli examines the benefits that may derive from
a plurality of ownership types, business models and corporate objectives in
the banking sector. To this extent, the main challenges that the current
regulatory framework in the European Union might pose to the coopera-
tive banking model, along with how the proportionality principle could
help address some of these challenges, are also discussed.
Finally, in Chap. 10, Marco Migliorelli summarises the main issues and
trends discussed in the book and presents some concluding remarks.
Paris, France Marco Migliorelli
a
cknowledgements
I would like to thank the contributors. This book would have not come to
fruition without their strong expertise and exceptional commitment.
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