Co-operative Banking in Germany

From its origins, German co-operative banking has grown to form one of the three main pillars of the modern German banking system. Today it comprises 18.5 million members and is one of the three largest banking groups in Germany. Grouped into a national financial network—BVR (Bundesverband der deutschen Volksbanken und Raiffeisenbanken)—while still retaining their independence, German co-operative banks continue to demonstrate principles of solidarity enshrined in their original mission and a focus on domestic and SME markets despite diversification opportunities arising from deregulation. This chapter examines the success of this hybrid model in comparison with domestic commercial rivals. Overall, the co-operative banking network and its apex have proved that they are able to develop higher performances than those of the first two German shareholder-oriented groups, recording economic and patrimonial results and distinct operational characteristics over time. The sole network of German CBs has shown to have a noteworthy strategic value that persists over time. The worsening of the average profitability and efficiency of co-operative banks in the last period contributes to supporting the ongoing intra-sector aggregation process.