Co-operative Banks in Finland

Finnish cooperative banks originated in the early twentieth century as agricultural lenders. Initially they were small Raiffeisen—type credit cooperatives, that operated in limited geographical area only. Their importance grew after the Second World War due to their participation in the reconstruction efforts. In the postwar period, their management professionalized and they started to function as retail banks. In 1970, their legal status was converted to banks. Finnish cooperative banks emerged relatively unharmed from the Finnish banking crisis of the early 1990s. An important consequence of the crisis was that the group structure was changed into tightly integrated one, including joint liability of all banks. This change was controversial and as a consequence, the cooperative banks seceded into two groups, the OP Group and the POP Group. The OP Group purchased a leading insurance company in the 2000s. It steadily increased its market share and had become the market leader in lending and deposits by 2009. During the crisis, both cooperative banking groups have remained well capitalized and successful. However, largely because of regulatory pressures both of them have went through a number of structural changes in the recent years.