Accounting, finance & control

A Snapshot of European Co-operative Banking

April 18, 2016 | 1 min read

In ‘A Snapshot of European Co-operative Banking’, Hans Groeneveld (professor financial cooperations at TIAS School for Business and Society) reviews developments in the overall performance of fifteen co-operative banking groups in ten European countries, on the basis of a range of selected indicators and with a focus on the situation in 2014.2 Their average performance is compared to that of the entire banking sector in the same countries.



Dual bottom line organisations

The focus is on the situation in 2014, because the numbers of some cooperative bank groups and aggregated data from national banking systems only come with a hefty slowdown. Moreover, profits are not their ultimate goal, but a means to accumulate capital, to absorb shocks, to invest and innovate, among other things. Profits are also needed for the realization of societal and/or social goals for their members. In distinguished words, co-operative banks are ‘dual bottom line’ organisations. Additionally, the "performance concept’ knows many other dimensions besides the financial aspect.


The report finds that the longer term trend of an expanding member base continued in 2014; co-operative banking groups welcomed 1.3 million new members. The member-to-population ratio surpassed the value of 18 for the first time since 1997.

Retail banking

Since 2011, fluctuations in their total assets and loans have been moderate compared to those at all other banks. The composition of their balance sheet is structurally different from that of all other banks. Co-operative banks are primarily focused on retail banking, i.e. loans to and deposits from SMEs and households. They rely more on depositors as a source of financing, which is visible in the higher number of branches and employees in order to maintain or gain adequate access to current and new depositors. We conclude that the ROE of co-operative banks exhibits a more stable pattern over a longer time period. In 2014, the average ROE of co-operative banks amounted to 4, whereas the ROE of all other banks equalled 1.6. A partial explanation for the higher ROE of co-operative banks is their lower average cost-income ratio, which decreased by more than 4 percentage points to just below 60 in 2014. The average cost-income ratio of other banks fell by 2 percentage points to 63 in 2014. In other words, co-operative banks were, on average, organisationally more efficient. Finally, the average tier 1 ratios of both banking groups equalled 12.6 in 2013. In 2014, the average tier 1 ratio of co-operative banks and all other banks stood at 13.1 and 12.7, respectively.

Diversity in banking

An important take away from this analysis is that different banking models are apparently causing different reactions to economic upswings and recessions. This finding underscores the need for diversity in banking for the sake of competition and stability.

Download the rapport ‘A Snapshot of European Co-operative Banking’

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