The renewed relevance of cooperative and mutualist banks

For over a decade now, companies have been rethinking their governance to take into account not just the interests of shareholders, but those of all stakeholders: employees, customers, society and the regions in which they operate. They must also contribute to the challenges of sustainable development by becoming involved in social and environmental issues. In France, they can now define their “mission” in their articles of association.

This change, which reflects a profound shift in our societies, and which confirms the need to move away from shareholder capitalism toward partnership capitalism, points to the renewed relevance of cooperative and mutualist banks. They view their customers as a fundamental stakeholder since, as partners, they hold their capital, constitute and represent their governance (in the general meetings, on the boards of directors, and on the supervisory boards which control the executive). The governance of cooperative and mutualist banks is, therefore, organised in such a way that they are naturally “customer centric”.

In addition, the banks instinctively think in terms of regions and territories. This is because their board members are drawn from among customers living in the areas where they are located and where they conduct their business.

Employees, for their part, are more involved in the strategy pursued, given the size of the banking ISEs in question. In some companies, their representatives already took part in board meetings, even before it became a requirement.

Cooperatives and mutualist banks are often, by their nature, economically and socially committed to their territories because they live in osmosis with them. If things are going well, they contribute to the health of their regions. If the regions are doing well, the regional bank’s growth is facilitated. Their economic involvement is, therefore, a prerequisite for their existence. In this respect, it is absolutely indispensable for banks to continue to finance their region, even when it is experiencing an economic downturn. There is no savings fungibility for regional banks which would justify moving and reallocating savings to the detriment of a region based on the sole argument that the profit/risk ratio would be better there than here. The savings held by cooperative and mutualist banks are, therefore, used to fund the life and company projects of local customers and to support the local economy, regardless of the current environment.

This commitment is also seen in their CSR approach. They make a point of using a portion of their profits to finance general interest missions. These include cultural and sports initiatives, both of which promote social cohesion, and the transmission of knowledge and equal opportunity, which also contribute to cohesion by their very nature. The same holds true for the energy transition.

Cooperative banks are fully involved in the economic dynamic and social cohesion of the regions. This dynamic requires a strong local presence which contributes to making the banks unique. Relational, decision-making and managerial proximity is very important. The relationship between customer and bank must be sustainable and it conditions the ability of banks to do their job well and be profitable. In addition, the credit decisions of cooperative and mutualist banks are taken locally, in the region. Lastly, given the size of these banks and the regional presence of their management, who are true banking ISE entrepreneurs, managerial proximity is very strong. This is essential because retail banking is a services product and the ability to mobilise teams for the benefit of customers can be highly differentiating. This also ensures that they are responsive and can quickly adjust their strategy and their organisation to better meet the changing needs of customers and support their profitability.

The fact that regional cooperative and mutualist banks are not listed and are not dependent on the stock markets means that their vision is not limited by the short-term approach which sometimes defines the exchanges or by the often mimetic imperatives seen on the financial markets.

Olivier Klein, CEO of BRED, First Deputy Chairman of the Fédération Nationale des Banques Populaires