Read the interview with Mr José Manuel Fernandes, Member of the European Parliament & Second Opinion from Mr Jorge Volante, Chairman of the Board of Directors of FENACAM.
Message from the CEO, Nina Schindler
For decades, the cooperative banking engine has been powering the wheels of social and economic development across regions in Europe. Putting member ownership and democratic governance at the driver's seat, cooperative banks are geared toward member benefit and a long-term approach to business, rather than profit maximisation. Staying on course to protect trust and proximity to members and customers down the road is part of the business policy.
The combined effect of these differentiating banking features creates a wide range of benefits for regions, communities, and society. Cooperative banks particularly enhance the endogenous potential of regions and thereby provide important contributions to their economic developments. They are stable and steady providers of loans, even during times of crises. At the same time cooperative banks are among the best-capitalised European banks and contribute to a more stable and diverse European banking market.
To enhance visibility and awareness of these benefits, EACB’s Portuguese member Crédito Agrícola sets a sign regarding the decisive and irreplaceable role of the CA group for regional and local development, by publishing the book “Cooperative Banking and Regional and Local Development”, which provides solid evidence for the benefits of cooperative banking in Portugal. Portuguese cooperative banks, having long helped drive the modernisation of local businesses, harness their position as proximity banks to support key local initiatives and enable a smooth transitioning into the digital era and toward a sustainable economy.
As EACB we highly welcome this publication, which very much complements the efforts of our association to promote the benefits of cooperative banking.
3 Questions to Mr José Manuel Fernandes, Member of the European Parliament
Mr José Manuel Fernandes has been Member of the European Parliament since 2009. He is Head of the Portuguese Delegation - PSD - to the European Parliament. He is also full member of the Committee on Budgets, where he is the EPP Coordinator; of the Committee on AGRI, of the DMER and of the DLAT. And he is a substitute member of the Committee on EMPL, DMAG and DMED. In addition, he is Chair of D-BR and a permanent rapporteur for EU own resources and negotiator of the STEP platform.
- When you look at the role of banks in the economy in your country, do you see a specific place or role for cooperative banks? Do you see that cooperative banking provides contributions to society and communities in Portugal?
Crédito Agrícola has an important and strong role in Portugal. It is the only banking institution in many localities, namely in rural areas, playing a fundamental role in promoting economic, social, and territorial cohesion.
In Portugal, there are 3,440 branches of credit institutions that form the national network. Out of these 3,440 branches, 628 belong to the Crédito Agrícola Group, which corresponds to 18.3% of the total and more than double its market share. It is worth highlighting that the second and third banks with the largest number of branches are Caixa Geral de Depósitos, and Banco Comercial Português, with 495 and 456 branches, respectively.
Crédito Agrícola Group has more than 420 thousand cooperative members and more than 2 million clients spread across 628 agencies. In terms of cohesion, cooperative banks play a prominent role in the Portuguese economy since they have a strong commitment to social responsibility and contribute to reducing regional asymmetries. The cooperative banking sector is of great importance to society, as it promotes the reinvestment of private resources in their communities and maintains a long-term vision for sustainable economic growth, social development, and environmental responsibility. Moreover, cooperative banks play a key role in strengthening the resilience of the economy, ensuring a just transition, reducing inequalities, creating employment opportunities, strengthening the sense of community, combating depopulation, and reinforcing the development of rural areas. Therefore, we can claim that cooperative banks defend European values, promoting humanistic and solidarity principles.
- Do you think politicians, both on the European and the national level, are sufficiently aware of the specific mission of cooperative banks and their benefits? If not, what should cooperative banks do?
I believe that politicians are not fully aware of the importance and positive impact that cooperative banks have on society as a whole. Proof of this is that the current legislation does not establish distinct rules, for example, for supervision for cooperative banks and commercial banks. It is crucial to recognise and treat differently what is fundamentally different and to avoid adopting a homogenous approach that treats everything in the same way. There cannot be one-size-fits-all thinking.
Cooperative banks face challenges that can undermine their social and economic impact, to which effective answers and solutions must be found. For that, European and national legislators should adopt specific legislation to overcome these obstacles and enable the consolidation and development of social economy, as well as to ensure that these entities can compete effectively. Cooperative banks have an added value for society and, to ensure their proper recognition, it is necessary that these institutions are adequately supported. More should be done at the policy and regulatory level to help cooperatives fulfil their mission.
There is also a need for greater involvement in social innovation. In supporting microcredit. In this context, InvestEU can be an interesting instrument. InvestEU aims to stimulate investment in Europe by making it more effective, simple, and flexible. The Fund mobilises public and private investments through a 38 billion euro guarantee from the EU budget. This guarantee will support investment projects that contribute to the achievement of EU’s sustainability objectives, from financial partners such as the EIB (European Investment Bank) and other national promotional banks. InvestEU supports four areas: sustainable infrastructure; research, innovation, and digitalisation; small and medium-sized enterprises; and social investment and skills.
That said, I challenge institutions in the cooperative banking sector to see how they could access InvestEU, notably in the areas of social investment and SME.
- Looking at the European political agenda, do you see a role for cooperative banks in supporting the transition to a more sustainable and social economy?
Cooperative banks are fundamental to Europe's prosperity, in both social and economic terms. Operating as social economy organisations, these banks stand as integral components of the European social model, actively driving the realisation of the European Pillar of Social Rights, which seeks to ensure equal opportunities and social cohesion throughout the EU.
During periods of crisis within the European Union’s social market, society and economy, the cooperative banking sector has demonstrated a commendable role in offering robust and timely responses. Their actions have proved instrumental in mitigating the adverse effects of these crises, underscoring their critical role as engines of social and economic resilience.
The EU's political and strategic agenda has as one of its priorities the transition to a sustainable economy, and cooperative banks have the potential to drive that transition.
Furthermore, a more sustainable and social economy must be people centred. And here, the cooperative banks are protagonists. They actively contribute to the development of communities and promote the economic growth of the regions where they operate without aiming for profit. By contributing to the promotion of the local economic tissue and to the social progress of regions, through proximity banking that promotes the well-being of the community, they fulfil the purpose of sustainability. This strengthens cohesion and social justice within the European Union and lays the foundation for a more sustainable and inclusive European economy that leaves no one behind.
As these cooperative banks fulfil their purpose of sustainability by promoting both economic prosperity and social advancement, they lay a solid foundation for a more sustainable and inclusive European economy. Their philosophy makes them invaluable partners in driving the EU towards a sustainable future, where economic progress aligns harmoniously with social welfare, fostering a thriving and equitable Europe.
Second Opinion from Mr Jorge VOLANTE, Chairman of the Board of Directors of FENACAM
Mr Jorge Volante has been the Chairman of the Board of Directors of the National Federation of Mutual Agricultural Credit Banks (FENACAM) since 2016. He graduated in Agricultural Sciences and has been Chairman of the Board of Directors of Caixa de Crédito Agrícola Mútuo de Porto de Mós since 1986. Before his current capacity, he also held several positions in the central institutions of Crédito Agrícola, namely, at Caixa Central de Crédito Agrícola Mútuo, the Board of Risks (1988), the Board of Directors (2001) and the General and Supervisory Board (2003).
Writing about the history and institutional role of cooperative banking in Portugal means talking about freedom of association and a strong will for social and economic transformation of territorial communities that, otherwise, would not be capable of development.
The Caixas de Crédito Agrícola Mútuo (CCAMs) were born, grew, modernised and organised in a regulatory manner, without ever forgetting their origin as social economy institutions and, therefore, with their own rights and duties. These banking institutions are, above all, trusted by local populations for their role as proximity banks, capable of understanding and supporting local economic initiatives in a different, but equally rigorous, way from purely commercial banks.
In the context of their historical trajectory, it is important to highlight that they had a decisive role in the modernisation of local businesses, and particularly in the transformation of the agricultural management model that Portugal faced in the 1980s with the common agricultural policy (CAP).
Since then, the CAP has required our agriculture to become more sophisticated and organised within more demanding management parameters. Against this background, CCAMs have made a decisive contribution to the provision of technical support needed for this transformation.
Today, we are concerned about the legal and social status of this banking sector alongside its modernisation and adaptation to new regulatory times and digital transformation. In this regard, we see it as indispensable that the ECB and the EBA continue to develop a regulatory environment that take into account the legal and historical nature of the different members of the banking system.
Reducing the banking system to exclusively commercial banks may be convenient, but it is certainly not prudent and it is potentially unconstitutional.
During the challenging years of the 2011 crisis, the CCAMs withstood the difficulties and, unlike commercial banks, did not need to be bailed out, which is a source of pride for us and a demonstration of the prudent management carried out.
Talking about cooperative banking in Portugal, it is an established reality that needs to be protected and valued as a source of diversity of the banking sector but, above all, as an agent of support for local communities.
In Portugal, Crédito Agrícola has 617 branches, 4.110 employees, 1.381 million customers, holds 5,6% of the credit market and 8% market share in customer deposits, and is guided by the slogan “The national bank with a local accent".