Cooperative banking

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"Cooperative bank" redirects here. For banks by this name, see Co-operative Bank.

Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world.

Cooperative banking, as discussed here, includes retail banking carried out by credit unions, mutual savings banks, building societies and cooperatives, as well as commercial banking services provided by mutual organizations (such as cooperative federations) to cooperative businesses.


Credit unions[edit]

Main article: Credit union

Credit unions have the purpose of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members.[1] Its members are usually required to share a common bond, such as locality, employer, religion or profession, and credit unions are usually funded entirely by member deposits, and avoid outside borrowing. They are typically (though not exclusively) the smaller form of cooperative banking institution. In some countries they are restricted to providing only unsecured personal loans, whereas in others, they can provide business loans to farmers, and mortgages.

Cooperative banks[edit]

Larger institutions are often called cooperative banks. Some are tightly integrated federations of credit unions, though those member credit unions may not subscribe to all nine of the strict principles of the World Council of Credit Unions (WOCCU).

Like credit unions, cooperative banks are owned by their customers and follow the cooperative principle of one person, one vote. Unlike credit unions, however, cooperative banks are often regulated under both banking and cooperative legislation. They provide services such as savings and loans to non-members as well as to members, and some participate in the wholesale markets for bonds, money and even equities.[2] Many cooperative banks are traded on public stock markets, with the result that they are partly owned by non-members. Member control is diluted by these outside stakes, so they may be regarded as semi-cooperative.

Cooperative banking systems are also usually more integrated than credit union systems. Local branches of cooperative banks select their own boards of directors and manage their own operations, but most strategic decisions require approval from a central office. Credit unions usually retain strategic decision-making at a local level, though they share back-office functions, such as access to the global payments system, by federating.

Some cooperative banks are criticized for diluting their cooperative principles. Principles 2-4 of the "Statement on the Co-operative Identity" can be interpreted to require that members must control both the governance systems and capital of their cooperatives. A cooperative bank that raises capital on public stock markets creates a second class of shareholders who compete with the members for control. In some circumstances, the members may lose control. This effectively means that the bank ceases to be a cooperative. Accepting deposits from non-members may also lead to a dilution of member control.

Land development banks[edit]

The special banks providing Long Term Loans are called Land Development Banks, in the short, LDB. The history of LDB is quite old. The first LDB was started at Jhang in Punjab in 1920. This bank is also bassed on Co-operative. The main objective of the LDBs are to promote the development of land, agriculture and increase the agricultural production. The LDBs provide long-term finance to members directly through their branches.[3]

Building societies[edit]

Main article: Building society

Building societies exist in Britain, Ireland and several Commonwealth countries. They are similar to credit unions in organisation, though few enforce a common bond. However, rather than promoting thrift and offering unsecured and business loans, their purpose is to provide home mortgages for members. Borrowers and depositors are society members, setting policy and appointing directors on a one-member, one-vote basis. Building societies often provide other retail banking services, such as current accounts, credit cards and personal loans. In the United Kingdom, regulations permit up to half of their lending to be funded by debt to non-members, allowing societies to access wholesale bond and money markets to fund mortgages. The world's largest building society is Britain's Nationwide Building Society.


Mutual savings banks and mutual savings and loan associations were very common in the 19th and 20th centuries, but declined in number and market share in the late 20th century, becoming globally less significant than cooperative banks, building societies and credit unions.

Trustee savings banks are similar to other savings banks, but they are not cooperatives, as they are controlled by trustees, rather than their depositors.

International associations[edit]

The most important international associations of cooperative banks, which is based in Paris, is the International Cooperative Banking Association (ICBA), which has member institutions from around the world, and the Brussels based European Association of Co-operative Banks.

By region[edit]


In Canada, cooperative banking is provided by credit unions (caisses populaires in French). As of September 30, 2012, there were 357 credit unions and caisses populaires affiliated with Credit Union Central of Canada. They operated 1,761 branches across the country with 5.3 million members and $149.7 billion in assets.[4]


The caisse populaire movement started by Alphonse Desjardins in Quebec, Canada, pioneered credit unions. Desjardins opened the first credit union in North America in 1900, from his home in Lévis, Quebec, marking the beginning of the Mouvement Desjardins. He was interested in bringing financial protection to working people.

United Kingdom[edit]

British building societies developed into general-purpose savings and banking institutions with ‘one member, one vote’ ownership and can be seen as a form of financial cooperative (although many de-mutualised into conventionally owned banks in the 1980s and 1990s). The UK Co-operative Group includes both an insurance provider, The Co-operative Insurance, and The Co-operative Bank, both noted for promoting ethical investment.

Continental Europe[edit]

Important continental cooperative banking systems include the Crédit Agricole, Crédit Mutuel, Banque Populaire and Caisse d'épargne in France, Rabobank in the Netherlands, BVR/DZ Bank in Germany, Banco Popolare, UBI Banca and Banca Popolare di Milano in Italy, Migros and Coop Bank in Switzerland, and the Raiffeisen system in several countries in central and eastern Europe. The cooperative banks that are members of the European Association of Co-operative Banks have 130 million customers, 4 trillion euros in assets, and 17% of Europe's deposits. The International Confederation of Cooperative Banks (CIBP) is the oldest association of cooperative banks at international level.

In Scandinavia, there is a clear distinction between mutual savings banks (Sparbank) and true credit unions (Andelsbank).

United States[edit]

Credit unions in the United States had 96.3 million members in 2013 and assets of $1.06 trillion.[5][6]


The origins of the cooperative banking movement in India can be traced to the close of 19th century when, inspired by the success of the experiments related to the cooperative movement in Britain and the cooperative credit movement in Germany, such societies were set up in India. Cooperative banks are an important constituent of the Indian financial system. They are the primary financiers of agricultural activities, some small-scale industries and self-employed workers. The Anyonya Co-operative Bank in India is considered to have been the first cooperative bank in Asia. Dombivli Nagari Sahakari Bank Ltd. is 1st Co-operative Bank to launch Mobile Banking Services in India. [7]


Ofek (Hebrew: אופק) is a cooperative initiative founded in mid-2012 that intended to establish the first cooperative bank in Israel.[8]


The Co-operative Central Bank Ltd (CCB) [9] was established in 1937 under the Co-operative Societies Laws and Rules having as its main purpose the provision of banking and other ancillary services to member co-operative societies which form the backbone of the agricultural community of Cyprus. Over the years the Bank has seen the need to expand and diversify its activities and is now in a position to provide the full range of services normally offered by comprehensive rural banks. The establishment of the Bank was a major event and turning point in the development of the Co-operative Movement and has proved instrumental in eradicating the then prevalent usury and exploitation of farmers. Its progress has been rapid and its success beyond the expectation of the pioneers of the Co-operative Movement. In mid 2013, Cyprus’ Co-operative banking system announced a major restructuring, where a list of 18 companies would be created by merging the existing 93 Cooperative Banks.[10]

Microcredit and microfinance[edit]

The more recent phenomena of microcredit and microfinance are often based on a cooperative model. These focus on small business lending. In 2006, Muhammad Yunus, founder of the Grameen Bank in Bangladesh, won the Nobel Peace Prize for his ideas regarding development and his pursuit of the microcredit concept.

List of cooperative banking institutions[edit]

Cooperative banking institutions
(2010 US$ millions)[11]
TypeAlternative nameNotes
Crédit AgricoleFrance[12]Joint stock bankCASAMajority owned by federation of credit unions
DZ BankGermanyBankDeutsche Zentralgenossenschaftbank
German Central Cooperative Bank
Owned by three quarters of all Volksbank and Raiffeisenbank (cooperative banks) in Germany and Austria
Caisse d'EpargneFranceliterally “savings bank”Credit union federation
RabobankNetherlands1,500,000+Credit union federation
Nationwide Building SocietyUKBuilding societyWorld's largest building society
Groupe Banque PopulaireFrance3,400,000
Desjardins GroupCanada5,795,277[13]Credit union federationLeading bank in Quebec
Raiffeisen ZentralbankAustriaBankRZB ÖsterreichCredit union federation
Progoti Co-operative Land Development Bank LimitedBangladeshBankProgoti BankThe largest Land Development Bank in Bangladesh
NonghyupSouth KoreaBanking division of agricultural cooperativeNational Agricultural Cooperative Federation (NACF)Approx US$230 billion in loans
Iccrea BancaItalyBankIstituto Centrale del Credito Cooperativo
Cassa Centrale Banca - Credito Cooperativo del Nord EstItalyBankCCB
Raiffeisen Landesbank SüdtirolItalyBankCassa Centrale Raiffeisen dell'Alto Adige
Raiffeisen (Switzerland)SwitzerlandCredit union federation
Banco Cooperativo Español and Caja RuralSpain
OP-Pohjola Group and Pohjola BankFinland31% share of Finnish credit market, and 32% share of savings and deposit market[14]
bankmecuAustralia125,000+$3bbankAustralia's first customer owned bank
Bank PersatuanMalaysia46,13586,375,542.97BankKoperasi Bank Persatuan Malaysia Berhad2nd national cooperative bank in Malaysia
Bank RakyatMalaysiaIslamic cooperative bankBank Kerjasama Rakyat Malaysia Berhad
Co-operative BankUKNot applicable[15][16]BankSubsidiary of consumer cooperative
Navy Federal Credit UnionUS3,004,35233012Credit union
Shared InterestUK[17]Cooperative lending societyFinance for fair trade
GLS BankGermany
The Cooperative BankNew Zealand120,000+BankCustomer owned bank
Banco CredicoopArgentina
Alternative Bank Schweiz[18]Switzerland4,864Alternative bankABSsustainable and ethic banking

See also[edit]


  1. ^ E.g., 12 U.S.C. § 1752(1), available at; CUNA Model Credit Union Act § 0.20 (2007); see also 12 U.S.C. § 1757, available at; CUNA Model Credit Union Act § 3.10 (2007).
  2. ^ The Co-operative Bank of the UK strictly limits its borrowing from the markets, according to an October 2008 statement [1]: “... we do not borrow in the financial markets in order to lend. Our lending capital is generated from customers' investments and savings, leaving us a good deal less exposed to the vagaries of the market than many of the major lenders.”
  3. ^ TNAU. "LAND DEVELOPMENT BANK". TNAU Agritech Portal. Retrieved 8 January 2014. 
  4. ^ Credit Union Central of Canada. "System Results: National System Review, Third Quarter, 2012". Retrieved 12 December 2012. 
  5. ^ "2013 Annual Report". National Credit Union Administration. Retrieved 6 September 2014. 
  6. ^ Marte, Jonnelle (August 5, 2014). "About 100 million Americans are now using credit unions. Should you join them?". The Washington Post. Retrieved September 5, 2014. 
  7. ^
  8. ^
  9. ^ "Cyprus Co-operative Central Bank Ltd", 7 March 2014
  10. ^ "Merge of Cooperative Institutions". Cyprus Real Estate. 7 March 2014. Retrieved 25 August 2013. 
  11. ^ a b Figures at close of institution's 2007 financial year, from organization's annual report. If no US$ equivalent given in annual report, exchange rate of December 31, 2007, used.
  12. ^ EUR 31 billion
  13. ^ Desjardins Group figures — Information as at December 31, 2008. Available at
  14. ^ "Key figures". Unico Banking Institute. 2006. 
  15. ^ Co-operative Bank customers are eligible to join its parent Co-operative Group
  16. ^ 13.1 billion GBP
  17. ^ GBP 25.1 million
  18. ^ "Zahlen" (in German). Alternative Bank Schweiz. Retrieved 2014-12-14. 

External links[edit]