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Are listed banks the future?

Unlisted banks, especially cooperatives, face less pressure to shrink as a result of low returns. They are gaining market share – but falling behind in digitalization.

Dominic O'Neill on Europe 1920px.jpg

In the post-Covid era of accelerated banking sector digitalization, publicly owned savings and cooperative banks seem to be the ultimate throwbacks to the nineteenth century, when most of them were founded.

Local management – and, by extension, a deeply branch-based model of banking – is fundamental to both sorts of lender. That makes them seem diametrically opposed to the fast-growing and often international cloud-based neobanks of the twenty-first century.

But neobanks remain minnows in terms of lending. Cooperative banks have steadily increased their share of retail lending across Europe in the last decade. They are especially dominant in France, where the biggest is Crédit Agricole. In Germany, they compete for dominance with publicly owned local savings banks, the Sparkasse, which show little sign of any diminution of their power.

Cooperative banks have steadily increased their share of retail lending across Europe in the last decade

There’s a similar situation in countries such as Switzerland and the Netherlands, where mutually owned Rabobank is the country’s biggest retail bank.

Since 2008, these kinds of banks have often found it easier to cope with regulatory demands for more capital – as they are under less pressure to pay out dividends.

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