The French banking landscape includes players that are less well known to the general public but whose economic weight remains considerable: the credit unions. These institutions now account for more than two-thirds of bank financing for the French economy.
The major groups such as Crédit Agricole, Crédit Mutuel and the BPCE group (Banques Populaires and Caisses d'Épargne) operate under a legal model that is distinct from traditional commercial banks.
A distinctive legal structure
Credit cooperatives differ fundamentally from traditional banks in their legal structure. Whereas commercial banks are set up as joint-stock companies, cooperative banks are based on the cooperative principles defined by Law no. 47-1775 of 10 September 1947 on the status of cooperation.
Contrary to popular belief, they are not limited to agricultural financing. Article L.512-85 of the French Monetary and Financial Code states that networks such as the Caisses d'Epargne "participate in the implementation of the principles of solidarity and the fight against exclusion" and have as their purpose "the promotion and collection of savings and the development of provident savings".
The three founding principles
Three key principles distinguish credit unions from traditional banks.
The dual status of member/user
The first principle, set out in Article 1 of the Law of 10 September 1947, states that co-operatives are "constituted by several persons united voluntarily with a view to meeting their economic or social needs through their joint effort".
In this model, customers also own their bank through the holding of shares. These shares are not shares but represent "a stable debt owed by the bank to its customers" as explained by E. Lamarque in the Revue de droit bancaire et financier (May 2014).
However, this rule has been significantly relaxed. Article L.512-22 of the French Monetary and Financial Code, for example, allows Crédit Agricole to admit as members persons who have no connection with the agricultural sector.
The "one man, one vote" democratic principle
According to article 1, paragraph 3, of the law of 10 September 1947, "each cooperative member has one vote at the General Meeting".
This democratic principle means that the amount of capital held does not determine the weight given to decisions. It differs radically from the shareholder model, where power is proportional to the number of shares.
However, this principle is also subject to adjustments. Article L.512-5, paragraph 5, of the French Monetary and Financial Code states that "the Articles of Association of each Banque Populaire shall determine the number of votes each member shall have at General Meetings".
Controlled distribution of profits
The final principle concerns the use of financial surpluses. Article 1, paragraph 4 of the 1947 law stipulates that "the cooperative's surpluses are first and foremost set aside to ensure its development and that of its members".
Article 14 of the same law strictly limits the return on capital to a rate "no higher than the average, over the three calendar years preceding the date of the General Meeting, of the average rate of return on private company bonds, plus two points".
Regulated credit institution status
Despite their specific characteristics, cooperative banks are subject to the same prudential rules as other banking institutions.
Specific authorisation but extensive powers
Article L.511-9 of the French Monetary and Financial Code makes a clear distinction between authorisation "as a bank, mutual or cooperative bank, specialised credit institution, credit and investment institution or municipal credit fund".
This authorisation, issued by the European Central Bank on the recommendation of the Autorité de contrôle prudentiel et de résolution (ACPR), allows cooperative banks to carry out all banking transactions, as specified in article L.511-9, paragraph 3.
One notable feature: article R.511-3 of the same code provides for the possibility of collective authorisation for mutual networks, reflecting their pyramid-shaped organisation.
The obligation to join a central body
Articles L.511-30 and L.511-31 of the French Monetary and Financial Code require cooperative banks to join a central body (Crédit Agricole SA, BPCE or Confédération nationale du Crédit Mutuel).
These central bodies exercise administrative, technical and financial control over the affiliated institutions. They ensure their cohesion and proper functioning.
In its decision of 9 March 2018 (req. no. 399413), the Conseil d'État considered that these central bodies, although legal entities under private law, are vested with a public service mission involving the use of prerogatives of public authority.
Mandatory cooperative audit
Article R.512-1 of the French Monetary and Financial Code requires mutual banks with more than fifty employees to undergo a cooperative audit every five years.
This procedure, defined in article 25-1 of the 1947 law, aims to verify the organisation's compliance with the cooperative principles and to propose corrective measures if necessary.
Appropriate financial tools
Credit unions have specific instruments at their disposal to meet their financing needs.
Under article 19 tervicies of the law of 10 September 1947, they may issue members' cooperative certificates, securities reserved for members and associated companies.
These certificates enable companies to strengthen their equity capital while respecting cooperative principles. They confer on their holders a right on the net assets proportional to the capital they represent.
However, the legislation stipulates that "cooperative investment certificates, cooperative shareholder certificates and priority interest shares may not together represent more than 50% of the capital" (article 19 tervicies, paragraph 3).
The legal world of credit unions reflects a delicate balance between respect for original principles and the necessary adaptations to contemporary economic reality. Consulting a lawyer specialising in banking law is useful for member-policyholders wishing to understand their specific rights or for institutions wishing to change their status.
Sources
- Monetary and Financial Code, articles L.511-9, L.511-30, L.511-31, L.512-5, L.512-22, L.512-85, R.511-3, R.512-1
- Law no. 47-1775 of 10 September 1947 on the status of cooperatives, articles 1, 14, 19 tervicies, 25-1
- Conseil d'État, decision of 9 March 2018, req. no. 399413
- LAMARQUE E., "Is the cooperative model more moral? Le cas des banques coopératives", Revue de droit bancaire et financier, May 2014.
- THÉRY N., "Le principe d'unité dans les groupes bancaires mutualistes : Le cas du Crédit Mutuel", in Liber amicorum, Mélanges en l'honneur de Jean-Patrice et Michel Storck, 2021, Dalloz-Joly Édition.
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