The Cooperative Banking System in France

The cooperative credit system plays a key role within the French banking sector. Its main features are the strong territorial links and excellent knowledge of local custom. This is due to the decentralized organizational structure of the French cooperative banks. Together with commercial banks, mutual and cooperative banking groups are the second type of French credit intermediaries qualified, by banking law, to carry out any banking transaction in the observance of limits put by laws, regulations or statutes. This chapter is divided into three sections. The first section analyzes features, regulators and the structure of French banking system as well as the profitability and efficiency indicators of French banks. The second section, dedicated to the cooperative credit sector in France, analyzes its institutional and legal aspects as well as the structure of the French cooperative network. In particular, we describe in detail the four mutual and cooperative banking groups in France, and we examine the evolution of their dimensional, economical and patrimonial results between 2003 and 2005. Finally, the third section provides a dimensional and economical comparison between cooperative and commercial banks in terms of the evolution of the banks’ number and market share for deposits and loans; then, this section illustrates the guidelines followed by international rating agencies to attribute cooperative banks’ rating; and finally, the third section provides a comparative analysis of the four cooperative banking groups with reference to the main results achieved on 31 December 2005.