The Credit Cooperative System in Spain

Like other European countries, Spain has a long tradition of cooperative banks. Although some credit unions existed previously, essentially they date from the early twentieth century, originating as institutions founded by medium and small-sized farmers to improve their access to banking services. However, they occupied a marginal position in the financial system until the legislative reforms of the 1970s. During the two last decades of the twentieth century, Spanish cooperative banks suffered a deep crisis, two changes in their organizational model and the shock of transformation and innovation in the financial system. Currently, the sector is made up of 65 small institutions with a relatively small market share: slightly over 4.4 % of total assets. Their model of organization has been threatened by weak cohesion and by not behaving as a true group. The financial crisis that started in 2007 affected Spanish cooperative banks less than other institutions, especially saving banks, because they held higher levels of capital and their business was retail-oriented. The more competitive environment nowadays could jeopardize the valuable principals which inspire the cooperative movement. Economic viability can and must be compatible with the democratic principle of ‘one member, one vote’, with enhancing ownership participation, with neighbourhood and community, with transparency and with their combination of social and financial objectives.