LEGAL AND INSTITUTIONAL FRAMEWORK

Co-operative Credit in Greece began its development in the last decade. The operation of the Greek Co-operative Banks are governed by the law 2076/92, which incorporated into Greek Law the European Union’s Directive 77/78 which defines the structure and operations of Credit Institutions, as well as to Act. No 2258/2.11.1993, promulgated under the hands of the Governor of the Bank of Greece.

After raising the minimum capital required and fulfilling certain conditions, they can apply and obtain the permit from the Bank of Greece to operate as Credit Institutions and as such can practice all banking activities like any Commercial Bank within the borders of the area in which they are activated.

Credit Co-operatives that obtain the permit to operate as Credit Institutions do not alter their legal status and can use the term “Co-operative Bank” in their name.

It should be noted that the amount of the minimum capital required has been readjusted 3 times in the last years to levels that do not respond to the financial and population data of many counties of our country, thus making the creation and evolution of Credit Co-operatives into Banks difficult! Consequently, the amount of 1,76 million Euros, which was initially required, became 2,64 million Euros on 1/1/98, 3,52 million Euros on 1/7/98 and 6 million Euros on 11/4/01.

Co-operative Banks transact only with their members and can execute all banking activities except for underwriting. Sometimes they transact with non-members when these transactions concern secondary banking transactions of intermediary type or when a Bank member participates in the transaction. Law 3483/7.8.06 Chapter B article 8 allows Cooperative Banks to do business with non-members after obtain a special permit from the Bank of Greece on the grounds that the institution fulfils certain conditions.

STRUCTURE - OPERATION

Presently there are a total of 9 Cooperative Banks operating in Greece, of which 4 are active in their geographic region, 3 exert their activity at the prefectural level and 2 Cooperative Banks licensed in the Territory level.

Meanwhile, there are 2 Credit Co-operatives operating, which besides the efforts undertaken for evolving into Co-operative Banks are activated by grating loans or providing other financial facilities to their members.

The Co-operative Banks and Credit Co-operatives have founded the Association of Co-operative Banks of Greece (ACBG), which constitutes the instrument for the representation, support and development of Co-operative Credit in our country.

In the short time of their operation, Co-operative Banks have played a significant role locally by intervening - in a supplementary and enhance manner - in the banking system through the establishment of a new type of Bank, which is distinguished for its customer-oriented perception, supports and is supported by local productive forces and enhances local development.

They mainly address to Small and Medium enterprises and private citizens by providing competitive banking products adjusted to local conditions and with operational features that establish them as reliable, friendly, and flexible.

The customers-members of Co-operative Banks are dealt in a manner of trust and long-term prospect for co-operation; facts that contribute in the constant upgrading of the banking services and products provided.

The decentralised structure of Co-operative Banks enforces the personal relationship between customer and Bank, increases efficiency and in combination with the low operational cost, the modern computerised systems and the positive financial results as well as the benefits achieved for their members (dividends, capital gains, transaction profits) it gains the trust of local societies and creates the conditions for dynamic development and prospects.

DEVELOPMENT OF FINANCIAL FIGURES AND OTHER DATA

The development of various data of Co-operative Banks, during the last 5 years, can be noted in the respective tables, which illustrate the level of developments as well as the prospects created.

The development of these sizes varies from Bank to Bank and this is due to the time they began their operation and other factors, such as the structure of the local economy, the dynamic for development of the areas in which they are activated and the degree of the Bank’s activation.

It should be noted that during the last 5 years, the average increase in equity capital was 18,9%, in assets 24,0%, in loans 24,7% and in deposits 23,38%.

In other sizes, which are indicative of the dynamics of Co-operative Banks, we note that the number of branches during the same period reported an average increase of 12,2%, while the personnel and the members 12,9% and 8,0%, respectively.
The easy access of Small & Medium enterprises to the banking system, the creation of banking products adjusted to local needs, the friendly dealing and the provision of immediate customer service as well as the support and participation of the banks in the local developmental initiatives, constitute in brief the multidimensional role and the differentiated operation of Co-operative Banks in relation to other Credit Institutions.

NEW ENVIRONMENT - COURSE - PROSPECTS

Today, all of us are experiencing the high competition and the constant new adjustments noted in the economic and business sector.

The entry of our country in the Economic Monetary Union of low interest rates reduces the traditional sources for profits and opens new directions in the organisation and operation of banks, based on the axes of capital management and the use of new technology in the approach and provision of customer service. Bank mergers and acquisitions on a national and international level, for the achievement of scale economies, and the penetration of non-traditional banking transactions in the field of banking transactions create new data in the banking market. However, there are two facts that are significantly encouraging:

The number of customers and the volume of the transactions are increasing and
The role of the Bank as an advisor and as a Credit Institution, which satisfies the whole range of its customer’s financial needs, is appointed.

Co-operative Bank, which is mainly an institution of local societies with a certified client-oriented character, flexibility and decentralised operation, constitutes implicitly a banking institution model that can respond, through proper adjustments, to the customer’s needs.

Already, Co-operative Banks and Credit Co-operatives have proceeded to the materialisation of a strategy, which will increase their size, enhance their equity capital, develop their network and improve their competitive position.

The first step was made by the foundation of Panellinia Bank SA by the Co-operative Banks and Credit Co-operatives of our country.

The second step was made by the installation of a common electronic data processing system that allows interconnection between the Co-operative Banks and Panellinia Bank. The aim is to form a national network, to reduce their cost and give the opportunity to their members to be served in every Co-operative banking point.

The third step is being made by the Co-operation with other major European Co-operative Banks for the acquisition of the technical Know-how and the forming of a European network. Already DZ Bank, German’s Central Co-operative Bank participates at Panellinia’s capital. Negotiations have already begun with European Co-operative Banks in Bulgaria, Rumania, Portugal, Italy and Poland and we expect results soon.

By implementing this strategy, the Co-operative Banks acquire the advantages of a major banking group and constitute a rising banking force in our country.