Cooperative Banks

Small is Beautiful - Sometimes

  • Why it matters

    Why it matters

    Further consolidation is expected among Germany’s cooperative banks, which have seen their business model come under pressure due to low interest rates.

  • Facts


    • There are currently 994 cooperative banks, known as Volksbanken and Raiffeisenbanken, in Germany, down from over 7,000 in 1970. Their number is expected to decrease further still in coming years.
    • To compound the problem of low interest rates, the banks are struggling under the weight of regulatory costs, as small banks must fulfill the same requirements as larger ones: Analysts have calculated they had a 2.9-percent return on equity in 2015.
    • Some cooperative banks are opening new branches, contrary to the general market trend, in the hope of gaining new customers and reinforcing their proximity to the local market.
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Tegernseer Bank kassiert Strafzins von Reichen
Local cooperative banks are vanishing fast all over the country. Source: Peter Kneffel/DPA.

Raiffeisenbank Tüngental is a local community bank based in the outskirts of Schwäbisch Hall, a town in the western state of Baden-Württemberg. It’s one of Germany’s smallest cooperative banks – and it just might be the smallest bank anywhere in Europe. It has four employees, including the two members of its management board, a balance sheet total of just €27 million ($28.6 million) and around 900 retail customers.

Andreas Stein, one of the two managers, wants things to stay that way. He is keen for Raiffeisenbank Tüngental to remain independent, describing his business as a “retro bank.” The manager also wants to keep offering services such as coin sorting free of charge, something for which most other banks charge €5 these days.

“Mergers are not a solution,” Mr. Stein said.

That stands in contrast to dozens of other German cooperative banks, known as Volksbanken and Raiffeisenbanken, which are in the process of merging or planning to merge in the coming months and years.

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