Abstract
From its origins in the Raiffeisen-inspired agricultural credit co-operatives of the late nineteenth century, co-operative banking in the Netherlands grew throughout the twentieth and early twenty-first centuries and today occupies a substantial role in the banking sector. Its history has been characterized by an intense democratic dialogue that has been instrumental in developing an organizational model which continues to give voice to its members through bottom-up structures. The results obtained by the co-operative banking group are compared with those obtained by the two largest commercial joint-stock banks. Generally, the test results indicate that the two business models do show significant differences in their outcomes. The co-operative banking group exhibits a capitalization which is statistically significantly higher than that of non-co-operative banks. However, if we compare the two business models, taking into account their asset and liability allocative choices, we find that there are strong similarities. In terms of the exposure to credit risk and the economic performances achieved (net interest margin, ROAA, ROAE, and cost to income), we do not detect any significant difference between the two groups of banks.
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Notes
- 1.
Excluding the data of the European System of Central Banks (ESCB).
- 2.
These two indicators were respectively 3.6% and 70.2% in 2008 (ECB 2017).
- 3.
Data collected from ECB’s Statistical Data Warehouse.
- 4.
Data collected from Rabobank Group’s Annual Report for the year-end 2017.
- 5.
See Rabobank’s Annual Reports for the years from 2006 to 2008.
- 6.
See https://www.rabobank.com/en/images/02-infographic-rabobank-in-2016-eng.pdf. In 2017, its market share of mortgages rose to 22%. This increase is due to a combination of factors which Rabobank has favorably exploited, such as: the return of the Dutch housing market to almost pre-crisis levels, the broad-based national economic recovery, an ongoing low interest rate environment, and the positive effect of the National Mortgage Guarantee that contributes to the strength of the Dutch residential mortgage market. Data reported by Rabobank indicates that 20.0% of Rabobank’s mortgage portfolio benefits from National Mortgage Guarantee. See Rabobank’s Investor Presentation for the year 2017.
- 7.
See Rabobank’s Annual Reports for the year-ends 2016 and 2017.
- 8.
Own calculations on EACB’s data.
- 9.
Ibidem.
- 10.
See Rabobank’s website dedicated to the Rabo Canon. https://www.rabobank.com/rabo-canon/bouwen-aan-een-duurzame-samenleving/pater-van-den-elsen/.
- 11.
See Rabobank’s publication “Rabobank through the years” at https://www.rabobank.com/en/images/r652-rabodoordetijd-eng-def.pdf
- 12.
See Rabobank’s publication “Rabobank through the years” at https://www.rabobank.com/en/images/r652-rabodoordetijd-eng-def.pdf.
- 13.
Ibidem.
- 14.
See Rabobank’s publication “Rabobank through the years”. https://www.rabobank.com/en/images/r652-rabothroughtheyears-uk-vdef.pdf.
- 15.
See Rabobank’s publication “Rabobank through the years”. https://www.rabobank.com/en/images/r652-rabothroughtheyears-uk-vdef.pdf.
- 16.
A governance committee was nominated in 2014, composed of four chairmen of LSBs, four chairmen of local boards of directors, two executive board members of the central institution, and representatives from relevant staff directorates of the apex institution.
- 17.
See Rabobank’s website. https://www.rabobank.com/en/about-rabobank/cooperative/in-practice/index.html.
- 18.
As reported by De Graaf (2018), “Pierre Lardinois, chairman of the executive board in the 1980s, had chaired the previous Christian Farmers Association in Noord Brabant and had served as Minister for Agriculture and as Agricultural Commissioner of the European Community. Wijffels, his successor, had been a civil servant at the Ministry of Agriculture and the General Secretary of the Dutch Association of Christian Employers (Nederlands Christelijk Werkgeversverbond). Smits had been the Director of Schiphol Airport and the highest civil servant in the Ministry of Transport. The idea had been that, since Rabobank was state owned, it was too politically involved to be led by a banker”.
- 19.
See Rabobank’s Annual Report for the year-end 2015.
- 20.
Prior to the Basel 3 regulations coming into force, the minimum value of the Tier 1 ratio was 4%.
- 21.
Had we employed the corresponding data solely for ING Bank N.V.’s consolidated data, its ratio of net loans to total assets (%) would have been aligned to those of Rabobank and ABN-AMRO Group.
- 22.
This test is also known as Wilcoxon ranksum test or Mann-Whitney U test.
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Poli, F. (2019). Co-operative Banking in the Netherlands. In: Co-operative Banking Networks in Europe. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-21699-3_8
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