by Paolo Verri
BOLOGNA
“As cooperative credit banks, we face a double challenge, one that concerns the banking world in general and one that concerns the universe of BCCs specifically.” This is how the president of Emil Banca and vice president of the Federation of Cooperative Credit Banks of Emilia-Romagna, Gian Luca Galletti, frames the debate that sees the BCCs divided between the need for growth and guarantees set by the ECB and the need to preserve the mutualistic model and proximity to the territories.
Mr President, what are the forces in the field?
“There is the banking world, and the ECB in particular, which is increasingly pushing towards large dimensions and therefore asks banks to be bigger, more efficient. To be more efficient, branches must be closed and this involves abandoning all those branches that today are in the internal, more disadvantaged areas, such as the Apennines and some areas of the plain. And this inevitably creates more inequality”.
There are several studies on this topic, including one by Professor Giuseppe Torluccio, of the University of Bologna, which focus precisely on the effects of bank closures on the economic fabric. What conclusions did they reach?
“Many studies, including that of Professor Torluccio, prove that abandoning those territories creates social inequality, because those territories themselves become increasingly poorer. But every day we have practical proof that this happens. Companies that need physical contact with the bank close down and therefore more and more disparity is created between rich and poor areas”.
What can cooperative credit do?
“The task of cooperative credit is precisely to resist this temptation and to do banking well even in the internal areas, even at the cost of losing some of its efficiency. In the DNA of cooperative credit banks, however, by statute there is precisely the preservation and investment in communities, right? This is the time to do it”.
Even within the cooperative world, visions are different.
“The second challenge I was referring to is precisely within the cooperative world. After the 2016 reform, which gave birth to the two groups headed by Iccrea Banca and Cassa Centrale Banca, the temptation today is to make the small cooperative credit banks disappear and encourage mergers with the larger ones. I believe that this, which I do not want to call a mistake, is nevertheless something that should not be done. Even the small banks among the small ones, with 8 or 10 branches, must remain because they too safeguard the biodiversity of the cooperative credit world”.
Should the role of Federcasse also change?
“Federcasse must increasingly safeguard, even with respect to groups, this ‘biodiversity’. This is the request that emerged during the last meeting of the cooperative credit starting from the intervention of Alessandro Azzi, in his capacity as president of the Lombard Federation of Cooperative Banks”.
In this context, what do BCCs need?
“The larger cooperative credit banks, at this time, must show solidarity with the small ones, even at the cost of putting their own effort into it.”
How do cooperative credit banks in Italy balance the need for efficiency with their commitment to local communities?
Table of Contents
Cooperative Credit Banks in Italy: Striking a Balance between Growth and Proximity to Local Communities
As the banking industry continues to evolve, cooperative credit banks in Italy are facing a dual challenge. On one hand, they must conform to the European Central Bank’s (ECB) regulations, which emphasize larger dimensions and efficiency. On the other hand, they must preserve their mutualistic model and proximity to local communities, which is at the heart of their DNA. In this article, we will delve into the implications of this dilemma and explore the role of cooperative credit banks in promoting social equality and community development.
The Push for Efficiency and the Risk of Inequality
According to Gian Luca Galletti, President of Emil Banca and Vice President of the Federation of Cooperative Credit Banks of Emilia-Romagna, the ECB’s emphasis on efficiency is leading to the closure of branches in disadvantaged areas, such as the Apennines and certain regions of the plain. This, in turn, exacerbates social inequality by depriving local communities of essential banking services.
Studies, including one by Professor Giuseppe Torluccio of the University of Bologna, have consistently shown that bank closures have a devastating impact on the economic fabric of local communities. By abandoning these territories, banks contribute to the widening of the gap between rich and poor areas, ultimately exacerbating social inequality.
The Role of Cooperative Credit Banks in Preserving Communities
In this context, cooperative credit banks have a vital role to play in preserving local communities and promoting social equality. By resisting the temptation to abandon disadvantaged areas in pursuit of efficiency, these banks can continue to serve as a lifeline for local businesses and individuals. As Galletti emphasizes, “Cooperative credit banks must do banking well even in internal areas, even at the cost of losing some of their efficiency.”
By investing in local communities and maintaining a physical presence, cooperative credit banks can help to reduce inequality and promote economic development. This is especially critical in areas where access to banking services is limited, and the absence of banks can have a disproportionate impact on low-income households and small businesses.
The Divide within the Cooperative World
However, not all cooperative credit banks share the same vision. The 2016 reform, which led to the creation of two groups headed by Iccrea Banca and Cassa Centrale Banca, has created a divide within the cooperative world. Some advocate for the merger of smaller cooperative credit banks with larger ones, while others believe that smaller banks should be preserved and allowed to maintain their independence.
Galletti cautions against the temptation to eliminate smaller cooperative credit banks, arguing that even small banks with 8 or 10 branches have a vital role to play in serving local communities. By preserving these banks, the cooperative credit sector can maintain its diversity and continue to serve as a bulwark against social inequality.
Conclusion
The debate surrounding the future of cooperative credit banks in Italy is complex and multifaceted. While the ECB’s emphasis on efficiency is understandable, it is crucial to recognize the impact that branch closures can have on local communities. By striking a balance between growth and proximity to local communities, cooperative credit banks can continue to play a vital role in promoting social equality and community development. Ultimately, it is up to policymakers, regulators, and cooperative credit banks themselves to work together to ensure that these institutions remain a force for good in Italian society.
Keywords: Cooperative credit banks, Italy, European Central Bank, social inequality, community development, banking industry, mutualistic model.
Meta Description: Learn how cooperative credit banks in Italy are navigating the challenges of growth and proximity to local communities, and why their role is crucial in promoting social equality and community development.
Optimized Image: A photo of a cooperative credit bank branch in a rural Italian town, with a caption highlighting the importance of community banking.
Internal Linking:
Federation of Cooperative Credit Banks of Emilia-Romagna
External Linking:
European Central Bank (https://www.ecb.europa.eu/)
* University of Bologna’s Department of Economics (https://www.unibo.it/en/departments/economics)
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How are cooperative credit banks in Italy balancing growth with their commitment to local communities?
Cooperative Credit Banks in Italy: Striking a Balance between Growth and Proximity to Local Communities
As the banking industry continues to evolve, cooperative credit banks in Italy are facing a dual challenge. On one hand, they must conform to the European Central Bank’s (ECB) regulations, which emphasize larger dimensions and efficiency. On the other hand, they must preserve their mutualistic model and proximity to local communities, which is at the heart of their DNA.
The Dual Challenge
According to Gian Luca Galletti, president of Emil Banca and vice president of the Federation of Cooperative Credit Banks of Emilia-Romagna, this dual challenge is putting pressure on cooperative credit banks to adapt to the changing landscape. “The banking world, and the ECB in particular, is increasingly pushing towards large dimensions and therefore asks banks to be bigger, more efficient. To be more efficient, branches must be closed and this involves abandoning all those branches that today are in the internal, more disadvantaged areas, such as the Apennines and some areas of the plain.”
The Consequences of Bank Closures
Studies, including one by Professor Giuseppe Torluccio of the University of Bologna, have highlighted the negative impact of bank closures on local economies. “Many studies, including that of Professor Torluccio, prove that abandoning those territories creates social inequality, because those territories themselves become increasingly poorer,” notes Galletti. “Companies that need physical contact with the bank close down and therefore more and more disparity is created between rich and poor areas.”
The Role of Cooperative Credit Banks
In light of this, cooperative credit banks have a crucial role to play in promoting social equality and economic development in local communities. Galletti argues that they must resist the temptation to abandon these areas and instead focus on preserving their mutualistic model. “The task of cooperative credit is precisely to resist this temptation and to do banking well even in the internal areas, even at the cost of losing some of its efficiency. In the DNA of cooperative credit banks, however, by statute there is precisely the preservation and investment in communities, right?”
The Importance of Biodiversity in the Cooperative Credit World
Galletti also emphasizes the importance of preserving biodiversity within the cooperative credit world. “The second challenge I was referring to is precisely within the cooperative world. After the 2016 reform, which gave birth to the two groups headed by Iccrea Banca and Cassa Centrale Banca, the temptation today is to make the small cooperative credit banks disappear and encourage mergers with the larger ones. I believe that this, which I do not want to call a mistake, is nevertheless something that should not be done. Even the small banks among the small ones, with 8 or 10 branches, must remain because they too safeguard the biodiversity of the cooperative credit world.”
The Role of Federcasse
In this context, Federcasse, the Italian Federation of Cooperative Credit Banks, has a crucial role to play in promoting and preserving biodiversity within the cooperative credit world. “Federcasse must increasingly safeguard, even with respect to groups, this ‘biodiversity’. This is the request that emerged during the last meeting of the cooperative credit starting from the intervention of Alessandro Azzi, in his capacity as president of the Lombard Federation of Cooperative Banks.”
Solidarity and Support
Ultimately, Galletti emphasizes the need for solidarity and support among cooperative credit banks. “The larger cooperative credit banks, at this time, must show solidarity with the small ones, even at the cost of putting their own effort into it.” By working together and supporting each other, cooperative credit banks can continue to promote social equality and economic development in local communities, while also adapting to the changing regulatory landscape.
Conclusion
cooperative credit banks in Italy are facing a dual challenge that requires them to balance their need for efficiency with their commitment to local communities. By preserving their mutualistic model, promoting biodiversity within the cooperative credit world, and showing solidarity with smaller banks, they can continue to play a vital role in promoting social equality and economic development in local communities.
