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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 (for the purposes of this article), includes retail banking, as carried out by credit unions, mutual savings and loan associations, building societies and cooperatives, as well as commercial banking services provided by mutual organizations (such as cooperative federations) to cooperative businesses.


Credit unionsEdit

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] Credit union members are usually required to share a common bond, such as locality, employer, religion or profession. 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 banksEdit

Larger institutions are often called cooperative banks. Some of these banks 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 elect 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 dilution of 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.

Building societiesEdit

Main article: Building society

Building societies exist in Ireland and several Commonwealth countries. They are similar to credit unions in organization, 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 is 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 associationsEdit

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


Notable cooperative banking institutions
Name Country Members
(2007 US$ millions)[3]
Type Alternative name Notes
Crédit Agricole France [4] Joint stock bank CASA Majority owned by federation of credit unions
DZ Bank Germany Bank Deutsche Zentralgenossenschaftbank
German Central Cooperative Bank
owned by three quarters of all Volksbank and Raiffeisenbank (cooperative banks) in Germany and Austria
Caisse d'EpargneFrance literally “savings bank” Credit union federation
RabobankNetherlands Credit union federation
Nationwide Building SocietyUK Building society World's largest building society
Groupe Banque Populaire France 3400000
Desjardins Group Canada Credit union federation Leading bank in Quebec
Raiffeisen Zentralbank Austria Bank RZB Österreich Credit union federation
Nonghyup South Korea Banking division of agricultural cooperativeNational Agricultural Cooperative Federation (NACF) Approx US$230 billion in loans
Raiffeisen Schweiz Switzerland Credit union federation
Banco Cooperativo Español and Caja Rural Spain
OP-Pohjola Group and Pohjola BankFinland 31% share of Finnish credit market, and 32% share of savings and deposit market[5]
Co-operative Bank UK Not applicable[6] [7] Bank Subsidiary of consumer cooperative
Navy Federal Credit UnionUS 300435233012 Credit union World's largest natural member credit union
Shared Interest UK 0008447 [8] Cooperative lending society Finance for fair trade




The caisse populaire movement started by Alphonse Desjardins in Quebec, Canada, pioneered credit unions. Desjardins wanted to bring desperately needed financial protection to working people. In 1900, from his home in Lévis, Quebec, he opened the first credit union in North America, marking the beginning of the Mouvement Desjardins.

United KingdomEdit

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 some de-mutualised into conventionally owned banks in the 1980s and 1990s). The UK Co-operative Group includes both an insurance provider, the CIS, and the Co-operative Bank, both noted for promoting ethical investment.

Continental EuropeEdit

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.

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


The origins of the cooperative banking movement in India can be traced to the close of nineteenth 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.

Microcredit and microfinanceEdit

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

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. 3.0 3.1 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 Dec 31, 2007 used.
  4. EUR 31 billion
  5. Template:Cite web
  6. Co-operative Bank customers are eligible to join its parent Co-operative Group
  7. 13.1 billion GBP
  8. GBP 25.1 million

External linksEdit


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