What is a credit union

Credit union

Cooperative bank. 1. Term: Credit institutions whose basic purpose is the economic development of their members through normal banking transactions. They are credit institutions within the meaning of Section 1 I KWG, as they operate many of the classic banking transactions listed there. In addition to the private banks (credit banks) and the public credit institutions (savings banks and Landesbanken), they form one of the three universal bank groups in the German banking system. Historically, they go back to the (rural) Raiffeisen banks and (urban) Volksbanks, which emerged from the middle of the 19th century in Germany but also soon in other countries in Europe and around the world. The credit unions also include the institutes or groups of institutes that arose as self-help institutions of individual professional groups, such as the Deutsche Apotheker- und Ă„rztebank eG, the BBBank eG (civil servants), church credit unions, the PSD banks (postal workers) and Sparda banks ( Railway workers). Since 1974, a credit union has been allowed to conduct business as a non-member.

2. Tasks: In terms of business policy, the credit union generally has priority over the promotion of its members in order to achieve maximum profit. However, the non-member business now accounts for a not insignificant proportion of the overall business. Credit unions usually work as universal banks and are supported by a cooperative financial network ("FinanzGruppe"). Some of the credit unions also operate the rural goods business.

3. Legal specifics: With a few exceptions, the legal form of the credit cooperative is the registered cooperative (eG). There is a special provision for calculating the regulatory capital (liability surcharge).

4. Tax meaning:Cooperative.

5. Importance: The 1,139 German credit unions had over 17 million members in 2011, had 13,075 bank branches and employed over 188,037 people (as of the end of 2012). The number of German credit unions continued to decline slightly in recent years due to the merger. Among the universal bank groups, the credit unions achieved a market share of around 17.1 percent (June 30, 2012) with total assets of EUR 736.8 billion (including the two cooperative central banks [DZ Bank and WGZ Bank]). In other European countries, too, sometimes with several independent groups, credit unions are of great (credit) economic importance, especially for medium-sized businesses and private customers.