Evolution and changes in cooperative banks: between the historical model and the universal bank

The metamorphosis of the cooperative banking sector is currently being examined by lawyers and economists alike. From a model based on community solidarity and mutual aid to major players in the global financial system, cooperative banks have undergone a remarkable evolution while maintaining certain distinctive legal features.

The origins of the cooperative banking model

The cooperative banking movement developed in the second half of the 19th century, particularly in Germany with the pioneering work of Frédéric-Guillaume Raiffeisen (1818-1888). His plan was to set up credit unions to provide mutual financial assistance to farmers facing difficulties in accessing credit.

This initiative was a response to a real need: the inaccessibility of banking services for certain populations. As stated in article L. 512-85 of the French Monetary and Financial Code, cooperative networks participate in "implementing the principles of solidarity and the fight against exclusion"..

The first experiments in France illustrate this social vocation:

• Crédit Mutuel, founded in Alsace in 1882
• Banques Populaires, formalised by the Clémentel Act of 13 March 1917
• Crédit Agricole, structured by the law of 5 November 1894

Historian Nicolas Beishenaly rightly observes that these establishments were intended to serve "Social groups rejected by the banks traditional.

The specific legal framework for cooperative banks

Cooperative banks are governed by a dual set of rules:

1. Cooperative law (Act no. 47-1775 of 10 September 1947)
2. Banking law (authorisation as a credit institution under article L.511-9 of the French Monetary and Financial Code)

This duality creates a hybrid system characterised by three fundamental principles :

• The dual status of member (owner and customer)
• The "one man, one vote" rule guaranteeing equal rights
• Priority allocation of profits to reserves (Article 1 of the 1947 Act)

Article L.512-1 of the French Monetary and Financial Code currently authorises cooperative banks to offer financial securities and even shares to the public, subject to certain strict conditions.

The universalisation of cooperative banking

The most significant change has been in the scope of their activities. Initially targeting specific categories (farmers, craftsmen, etc.), cooperative banks have gradually broadened their customer base.

Professor Thibault de Ravel d'Esclapon notes in his study that "cooperative banks are currently operating in the same segment as banks that can be described as traditional"..

This universalisation can be seen at the legal level:

• For Crédit Agricole, article R.512-5 of the French Monetary and Financial Code allows it to offer services to various non-agricultural categories
• For Banques Populaires, article L.512-2 states that they may "receive deposits from any person or company".

This transformation raises the question of a possible denaturing. Jean-Noël Ory speaks of a phenomenon of "hybridisation" of the cooperative model.

The structure of cooperative networks

La pyramid structure of cooperative networks distinguishes cooperative banks from traditional banks:

1. At local level: the local mutuals (in direct contact with members)
2. At regional level: the regional or federal caisses
3. At national level: the central body (Article L.511-30 CMF)

L'central body exercises significant supervisory powers under Article L.511-31 of the French Monetary and Financial Code. The Conseil d'État has recognised that this is a public service mission involving the use of public authority prerogatives (CE, 9 March 2018, req. no. 399413).

These prerogatives include :

• Network coordination
• Guaranteeing liquidity and solvency
• Administrative, technical and financial control
• The power to impose penalties

Contemporary issues

The massive presence of cooperative banks in the French banking landscape is undeniable. They represent "two-thirds of bank financing for the French economy". according to Nicolas Théry.

This dominant position brings with it major challenges:

1. Governance and democratic participation The "one man, one vote" principle has been adapted significantly. In the banking sector, "equality of voting rights is seriously undermined". according to Professor David Hiez.
2. Capital structure Legal instruments such as cooperative certificates (article 19 tervicies of the 1947 law) make it possible to strengthen equity capital while changing the nature of the capital.
3. Cooperative identity in a competitive environment The application of article 3 of the 1947 law (exclusivity) is largely adapted for cooperative banks.

The question remains: is it possible to maintain specific cooperative characteristics while adapting to the demands of the modern banking market?

A specialist law firm can help cooperative structures navigate the fine line between loyalty to historical principles and the need to adapt. Specific legal issues (governance, public offers of shares, member information) require specialised expertise.

Do you manage a cooperative bank or sit on its board of directors? Our lawyers can help you understand and master this complex legal framework. Contact us for a personalised analysis of your situation.

Sources

• Monetary and Financial Code, articles L.511-9, L.511-30, L.511-31, L.512-1, L.512-2, L.512-85, R.512-5
• Law no. 47-1775 of 10 September 1947 on the status of cooperatives
• De Ravel d'Esclapon, T. (2023). "Coopérative de crédit". Répertoire des sociétés, Dalloz
• Conseil d'État, 9 March 2018, req. no. 399413
• Beishenaly, N. (2013). "The theoretical foundations of credit unions", RECMA No 330.
• Ory, J.N. (2019). "French cooperative banking groups, ten years after the financial crisis", Revue d'économie financière n°134.
• Hiez, D. (2020). "Le principe démocratique en droit coopératif", AJ contrat.
• Théry, N. (2021). "Le principe d'unité dans les groupes bancaires mutualistes : Le cas du Crédit Mutuel", Mélanges en l'honneur de Jean-Patrice et Michel Storck.