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European co-operative banks leaders are proud of their model that puts people before profits and has been efficient and successful. This model is however challenged by the current regulation. The cumulative effect of CRD IV, and the new supervisory framework, combined with the new consumer protection rules are going to impact strongly the decentralised model of co-operative banks.
“Our local banks face great difficulties in coping with the amount and complexity of the new regulatory framework: they have to bear higher and higher compliance costs and have to apply more and more prescriptive measures. This may ultimately force them to organisational changes- or even to abandon their decentralised network system to gain economies of scale or to ease the reporting requirements”, Christian Talgorn, Chairman of the EACB, declared. “Is this really what the European economy needs? Less proximity, less local co-operative credit for the real economy? The presence of a dense network of co-operative banks, even in remote areas is expensive, but is in line with our business model and we think that it is a necessity for social and economic reasons”, he concluded.
The co-operative banks' leaders welcome that their specific features have been to some extent taken into account, notably in the CRD/CRR. They expect that this will continue. However they also point out the risk of a more and more intrusive and convergent European regulation. “If you consider the technical binding standards of the European Banking Authority, the crisis management or the deposit guarantee framework: how can this reconcile with the specific structure of co-operative banks? We need less simple legislation”, Hervé Guider, EACB General Manager, emphasised.
With their strength of about 70,000 banking outlets and 20 per cent market share of deposits in EU, and with an increasing number of members and clients in the past years, reaching 56 million members and 220 million customers in 2011, co-operative banks want to continue playing their crucial role for their members (i.e. small businesses, farmers, craftsmen’s, households, entrepreneurs or private individuals) and the territories to which they belong. The regulatory framework should enable them as opposed to undermining their identity and organisational structure.