Unión Nacional de Cooperativas de Crédito. Restructuring of credit cooperatives Integration processes in the sector

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1 Unión Nacional de Cooperativas de Crédito Restructuring of credit cooperatives Integration processes in the sector April 2012

2 Index Background... 2 The quiet consolidation... 5 The anti-crisis features of the cooperative model... 8 Tools used in the consolidation process In the last decade The figures taking part in the consolidation process Gaining size without losing identity The near future Last updates

3 Background The crisis has prompted a profound change in the structure of the Spanish financial system, especially in savings banks, and it extends to all financial entities and to many aspects of the banking business. With limited effects at first, its persistence over time revealed imbalances in our economy, even damaging credit cooperatives, despite their very good foundations. Credit cooperatives have quietly, and without the help of any public funds, undertaken their integration processes. After the first three legal phases of the reform, at present, the so-called consolidation is taking place and we will see the results in terms of integration in the near future. In the words of Javier Aríztegui, Deputy Governor of the Bank of Spain, The crisis has prompted a profound change in the structure of the Spanish banking system. Much of this change has focused on the transformation of savings banks, and its most visible manifestation has been the consolidation and downsizing of these savings banks. However, neither the scope of the reorganization of the financial system has been limited to these funds, nor has the reduction in the number of market participants been their milestone. The reform has covered all entities of the banking sector and it has addressed many different aspects of the business organization. The financial crisis that began in mid-2007 marked the beginning of what is known as the Great Recession. Five years later, the end of this crisis is not yet in sight as there are still some economies, including the Spanish economy, that are returning to a negative growth. The crisis in our country was initially limited, as the financial sector had little exposure to subprime mortgages, but over time this crisis has revealed the cumulative imbalances in our country, high level of both public and private debt and a real-estate bubble of unprecedented scope. In addition, the sharp increase in unemployment and the stagnation of the construction sector further accentuated the delicate economic situation with an increase in doubtful assets ratio, an increase in financing costs and a margin squeeze in an environment of historically low interest rates, which had a negative impact on the results of the financial sector. Even entities such as credit cooperatives were affected, despite their solid capitalization ratios, large membership base, enviable loan to deposit ratio, high liquidity and minimal dependence on markets. With a stable long-term strategy, and focused on retail banking and proximity, credit cooperatives have undertaken, in its own way, their own restructuring process. This means they are doing it quietly, without requiring any public funds, without fanfare, and slowly. Thus fulfilling the words of a certain senior executive of a major Spanish bank, who highlighted the work of those entities, among which of course was his own, and, clearly, also credit cooperatives: We are not part of the problem but part of the solution, meeting all the requirements, one by one, as they were asked to. This way, with the approval of Royal Decree-Law 9/2009, the savings banks restructuring process began; affecting 38 out of the 45 Spanish savings banks and reflected on 12 integration processes, 7 of which have received FROB aids. At that time, 2

4 Background the first integration movements begin in the credit cooperative sector. In our case, there were not any interventions by FROB or any contributions from public funds, even though it was allowed by the law. Following the entry into force of the rules that have been shaping the restructuring of the Spanish financial system, the reform of the Savings Law by Royal Decree-Law 11/2010 is the next milestone. After this Decree-Law, the effects of the crisis on the government deficit are devastating and dragged Europe down into its second sovereign debt crisis, with severe effects on confidence in the quality of the Spanish credit institutions balance sheets. As a measure, the Bank of Spain imposed all financial institutions the obligation to publish the details of their levels of exposure to the construction and real estate sector. In the case of credit cooperatives, the result is a lower overall exposure to such risks. As the previous measure was insufficient to restore trust, a financial system recapitalization process was launched by Royal Decree Law 2/2011. This Royal Decree Law required all Spanish banks to have a core capital level of at least 8% of all risk weighted assets. In the case of limited membership base or very exposed to wholesale financing markets, the percentage rose to 10%. Once again, the credit cooperative sector as a whole passed the test without any problems. Each and every one of the Spanish credit cooperatives were required to have a core capital level of at least 8%, as they had a broad number of private investors and their reliance on wholesale financing markets is low. All credit cooperatives passed the test. This way, on 10 March, 2011, when the Bank of Spain published a list of entities that needed more capital, 60 out of the 101 entities that met the requirements, were credit cooperatives. This was 100% of all consolidated groups containing all credit cooperatives in Spain by that moment, as the requisite reached the entire financial sector at a consolidated group level. During all this process, from a regulatory point of view, certain features regarding the requirements and tools for the restructuring were maintained. The goal was to take account of the legal characteristics of credit cooperative societies and the maintenance of their model. 3

5 Background Nevertheless, the Spanish credit cooperatives still do not require any help of public funds in order to undertake their own restructuring, as they are using their own means. There is no doubt that the entry into force of Royal Decree-Law 2/2012 of 3 February on 4 February, on financial sector consolidation, will boost again the integration process of the entire financial sector and, hence, that of credit cooperatives. We shall soon know the results in terms of integration, as the deadline for the submission of the consolidation plans to the Bank of Spain by the entities ended in March All entities must have presented their integration plans by May 2012 in order to gain regulatory approval. The new standard is again sensitive to a sector that is undertaking its restructuring without causing any problems nor detracting any of the State scarce resources, even given the present delicate situation. In fact, the article 2. Integration processes of the new Royal Decree-Law provides an exception for the case of credit cooperatives. This is so because the rest of entities are only allowed to become part of an integration by merger, while credit cooperatives can also use the IPS or cooperative group formula, solely based on contractual arrangements beginning on 1 September, 2011 in order to qualify for the established regime. 4

6 The quiet consolidation Once again the restructuring in the credit cooperative sector is quiet, as there is no pressure of requirements for capital, since all credit cooperatives in Spain meet them already. The new restructuring process is apparently soft and has the same pattern as before: a decrease of 10 entities in three years, followed by five years of stability in the total number of entities. However, if consolidated groups come into play in the analysis, we can see that the process was more intense and faster, as the number of entities was reduced to one half in the last three years. The entire consolidation process in the credit cooperative sector has been undertaken with quiet, silent but determined steps. This formula is very characteristic of this sector. Even though credit cooperatives hold a privileged position within the banking system (there are capitalized and solvent entities, with low doubtful assets ratio, which have not required public money), they have always chosen to anticipate new challenges when at their strongest. Credit Cooperatives In figures * * Provided by Unacc (National Union of Credit Cooperatives) * 2012 forecast While the credit cooperative sector was the only one that met the new capital requirements in February 2011, it wanted to go one step further thus accelerating the restructuring process, which is now at an advanced stage. In recent years, credit cooperatives have experienced the most important process of integration in their history. This way, if we focus on the evolution in the total number of entities, this process seems very subtle, especially if we compare it with the savings banks restructuring process; this has not only been more unstable, but it also led to the disappearance of more than two thirds of the Spanish entities in 2009 and to the disappearance of a model which, despite its flaws, had many interesting features. It seems that the credit cooperative sector has been following a repetitive pattern since the 90s; three consecutive years reporting a fall by around 10 in the total number of entities, followed by five years in which the total remains stable. The future trend seems to stick with this pattern too; if we take published reports from our associates into account, out of the 80 Spanish credit cooperatives in 2009, only 69 are expected to remain active at the end of this year. However, the remarkable thing about the foray into this sector landscape of cooperative groups with certain characteristics is that they enabled the Bank of Spain to consider them as consolidated groups. 5

7 The quiet consolidation The cooperative group is a typical but nonspecific figure of the cooperative model which Article 78 of Law 27/1999 of 16 July, on Cooperatives defines as a set of cooperatives, around a parent entity, which either exercises its power or provides mandatory instructions to the group of cooperatives so that there is a single decision-making unit. From the credit institutions regulation point of view and, more precisely, from a solvency point of view, the consolidated group is the most relevant concept. The third norm of the Bank of Spain Circular 3/2008 of 22 May on determination and control of the minimum own funds defines it as the group of two or more consolidated entities grouped by activity (i.e. credit institutions, investment services firms, investment companies, collective investment institution management companies, venture capital entities and fund management companies), in accordance with Article 8 of Law 13/1985 of 25 May, on investment ratios, own resources and information obligations of financial intermediaries, and basically focuses on the fact that the parent company must be Spanish. In these cases, the minimum own resources requirements must be met by the consolidated group as a whole, as well as the information requirements established by Circular 4/2004 of 22 December on financial and confidential information reporting standards, and sample financial statements. In the case of cooperative groups, the Institutional Protection Scheme (IPS) is based on a series of contractual ties, so that they can enjoy certain privileges, including some tax privileges linked to consolidated groups. In order to enjoy these, they must meet certain requirements set out in Article 8.3.d) of the Law 13/1985. They basically determine: The existence of a parent credit institution (part of the IPS), responsible for meeting the regulatory requirements on a consolidated basis and determining the policies, strategies and risk control measures and levels of the IPS. The existence of a mutual commitment to solvency and liquidity of at least 40% of each member's own resources and sharing of at least 40% of the results. The existence of a minimum stay period of ten years with a penalty system that reinforces the permanence and stability of the IPS. 6

8 The quiet consolidation Compliance with all the requirements in order to assign a risk assessment of 0% to IPS members risk exposures, in accordance with the Bank of Spain. Furthermore, in order to enjoy the foregoing tax benefits, they must share 100% of their results. Therefore, if we approach the trend in the number of entities analysis from the perspective of consolidated groups, the result is much different. Credit cooperatives In figures credit cooperatives Provided by Unacc (National Union of Credit Cooperatives) 85 consolidated groups * 48 41* * * 2012 forecast In the following graph, we see the evolution from 1991 to 2012 of both the number of credit cooperatives and the number of cooperative groups that are considered consolidated groups based on the operations announced by our associated entities. As we can see, there is a broad difference between these two groups. In just three years, the emergence of consolidated cooperative groups has reduced by one half the total number of entities in the sector. 7

9 The anti-crisis features of the cooperative model Credit cooperatives follow a traditional retail banking model, which avoids any sophisticated financial instruments, and is attached to the real economy. A different model from that of banks and savings banks, based on strong business and banking relationships with partners and customers. The goal of credit cooperatives is to create value for their members and their community, easing the financial inclusion of territories and different economic branches of activity, as opposed to that of commercial banks, which is maximizing profits. Due to their variable capital structure, stability and governance systems, credit cooperatives present great growth potential. Credit cooperatives have a rather unique banking model that enabled them to stay strong throughout the crisis, not requiring any public money since the start of the crisis so far. This form of banking presents a number of features that make the model unique. Although in recent years, this back to basics model was the trend for banking, credit cooperatives never abandoned the traditional model of attracting deposits and granting loans. This is the key to their success. In fact, the business model of this sector is based on a thorough understanding of each granted loan and also maintaining these loans in the originate to hold (OTH) balance, which keeps credit cooperatives aware of the level of risk taking at all times; a control method that could not lead other entities that follow a more centred model, to originate products to be distributed originate to distribute (OTD), which has been accused of being one of the major causes of this crisis. Although for many years this business model aroused much criticism in the most aggressive financial sector for being inefficient and obsolete, it has finally proven to be a way to create a type of banking away from sophisticated products. Even if these products cannot be accused of being the cause of the current crisis, they have indeed helped its spread around the world and have increased its disastrous consequences. This conservative, quiet and well-structured banking model is maintaining the financial ecosystem of our country, and also, thanks to it, the overall risk of the entire system is minimized. Diversity ensures the sustainability of the whole system, and in the case of the cooperative banking model it also reduces the total risk of the system; as it has been shown, these credit institutions did not originate the crisis. It is also important to note that, when credit cooperatives are called rural, professional or popular banks, they have nothing to do with savings banks. Credit cooperatives are credit institutions, thus under a different regulation and management. They are credit entities and, as such, they are governed by the same regulations as the rest of credit institutions. They are also governed by the specific cooperative regulations, but never by those governing savings banks. Furthermore, the governing bodies have nothing to do with this. They are more similar to the governing bodies of a limited company than to those of a savings bank. For example, the General Assembly is equivalent to the General 8

10 The anti-crisis features of the cooperative model Meeting of Shareholders of a limited company, and the Governing Council to a Board of Directors, with the complete absence of political representation. The modus operandi of credit cooperatives is based on connections, empathy and knowledge of the needs and circumstances of every community, every individual and every business. This approach allows detailed knowledge of the customer and the partner. In many cases, this positive relationship is imposed by the statutes governing the activities of credit cooperatives. These statutes establish that the majority of loans must be granted to their members (even at better terms than for the rest of customers). In Spain, credit cooperatives have the legal obligation of providing less than 50% of the total resources of the entity to third parties. Thanks to this particularity, a strong professional and business bond between the credit cooperatives and the members is created, which facilitates the task of granting credit and lowers the cost of study and monitoring operations. As opposed to a limited company, credit cooperatives do not seek to maximize profits and minimize costs, but the wellbeing of its members and their community. This deep reciprocal knowledge is reflected on the fact that credit cooperatives had the lowest doubtful assets ratio of the entire Spanish banking sector during the financial crisis. Furthermore, this low default rate enabled them not to cut credit lines. It should also be noted that credit cooperatives encourage the development of their community with activities that are financed by the Education and Promotion Fund (EPF), which is a fund used by credit cooperatives to develop the region in which they operate. Moreover, there is a high risk that this crisis will financially exclude certain territories, thus closing down offices and cutting jobs. For this reason, credit cooperatives have two important roles. On the one hand, they finance the economic activity of the community. On the other, they are expected to fill the gap left by other credit institutions, as they have been doing over the years. In this sense, it is noteworthy that 35% of branches of credit cooperatives are located in communities with less than 5,000 inhabitants and 22% of them are set in locations 9

11 The anti-crisis features of the cooperative model that do not exceed 25,000 inhabitants. Only 12% of the branches are located in cities with a population of over 300,000. Another characteristic of credit cooperatives is their capital structure, which is based on their definition as variable capital societies and has positively affected the corporate base, which, unlike other type of societies, is not only broad but stable, as it has been shown over the years. This enables them to set long term goals that they can only achieve thanks to their capital stability. In fact, credit cooperatives are expected to bring a positive inter-generational balance. This means that they leave positive legacies and savings to future generations, just as previous generations did for them. As mentioned above, although credit cooperatives are companies with variable capital, changes in the capital are less frequent than in other types of entities that operate under different organizational forms such as limited companies. This greater stability enables them to achieve longer term objectives, which ultimately involve more stable policies that contribute to minimizing the overall risks of the financial system. This feature is reinforced by another of the hallmarks of this model: the decision making, based on the principles of cooperatives, whose pillars are: The lack of relevance of social capital for the allocation and distribution of social rights. Although the rule is one member, one vote, also the partner s vote can be proportional to their contributions to social capital, to the activity or to the number of members of the associated cooperatives. It seeks to avoid the situation of having a single member controlling the credit cooperative; therefore there is an established limit for the concentration of capital. It seeks to encourage members to take part at General Meetings through the Preparatory Meetings and the Assemblies of Delegates. The credit cooperative sector has a great potential growth. While the assets of credit cooperatives in Spain are around 130 billion euros, this sector exceeds 5 billion euros in Europe, with a market share of 18% in terms of deposits and 20.1% in terms of loans. These figures are far from the Spanish entities figures. Therefore, this sector has an extraordinary 10

12 The anti-crisis features of the cooperative model potential growth in Spain that is now maximized due to the gap left by the savings banks, which are experiencing restructuration processes and changes, thus returning to the bank core values. 11

13 Tools used in the consolidation process The consolidation in the credit cooperative sector has used two figures: credit cooperative groups and mergers. At present, there are 4 groups: Grupo Cooperativo Cajamar, Grupo Cooperativo Caja Rural del Mediterráneo, Grupo Cooperativo Ibérico and Grupo Cooperativo Solventia. Another strategy chosen by the credit cooperatives is to merge in order to expand and grow, which can be undertaken either in combination with the creation of groups or independently, as with Nueva Caja Rural de Aragón and Caja Rural de Albacete, Ciudad Real y Cuenca. The credit cooperative sector has used both the mechanism of mergers (through absorption or creation of a new entity), and institutional protection schemes (which are used at specific moments in time, in order to launch the process of integration of savings banks, but are more typical for the cooperative model). Institutional protection schemes in the field of credit cooperatives are organized around the socalled cooperative groups, which after fulfilling a series of requirements, are considered a consolidated group of credit institutions, as provided in the Article 8 of the Law 13/1985 of 25 May on investment ratios, own resources and information obligations of the financial intermediaries and in the second norm, paragraph 3, of the Bank of Spain Circular 3/2008 of 22 May on the determination and control of the credit institutions minimum own funds. In any case, the integration process has been implemented through the creation of a secondgrade credit cooperative, another figure that is very common in the cooperative model consisting of a cooperative whose members are cooperatives themselves; in this case, two credit cooperatives in a so-called cooperative or joint venture. Then we will analyze, grouped by each of the figures used, the integration processes that have taken place in the sector, starting with the cooperative groups that have been formed. Today, in the field of credit cooperatives, there are four cooperative groups that are considered consolidated groups: Grupo Cooperativo Cajamar, Grupo Cooperativo Caja Rural del Mediterráneo, Grupo Cooperativo Ibérico and Grupo Cooperativo Solventia. During 2009, Grupo Cooperativo Cajamar became a consolidated group of credit institutions, as laid down in Article 8 of Law 13/1985 of 25 May, on investment ratios, own funds and information obligations of the financial intermediaries, and in the second norm, paragraph 3, of the Bank of Spain Circular 3/2008 of 22 May, on the determination and control of the credit institutions minimum own funds, designating Cajamar as the parent company of the consolidated group, which, from then on, will be composed of the following credit cooperatives: Cajamar Caja Rural, S.C.C. (parent company) Caja Campo, Caja Rural, S.C.C. Caja Rural de Casinos, S.C.C.V. 12

14 Tools used in the consolidation process In 2010, Caja de Crédito de Petrer, Caja Rural, Cooperativa de Crédito Valenciana, Caixa Rural de Turís, Cooperativa de Crédito Valenciana and Caixa Rural de Albalat dels Sorells, Cooperativa de Crédito Valenciana was joined; and subsequently Caixa Rural de Balears, Sociedad Cooperativa de Crédito were merged by acquisition by Cajamar. The process of establishing the group continues in 2011, with the integration of Caja Rural de Castellón S. Isidro, Sociedad Cooperativa de Crédito Valenciana. After all the modifications, the group is formed by the following credit cooperatives: Cajamar Caja Rural, S.C.C. (parent company) Caja de Crédito de Petrer, Caja Rural, C.C.V. Caja Rural de Castellón S. Isidro, S.C.C.V. Caixa Rural de Turís, C.C.V Caja Rural de Casinos, S.C.C.V. Caixa Rural de Albalat dels Sorells, C.C.V. The total number of assets of credit cooperatives that make up the Cooperative Group amounts to a total of billion euros. This means that it is the largest consolidated group in the sector, with a joint net profit of 43.7 million euros, accounting for 16.78% of the sector as a whole. The group employs over 4,800 people in its 1,009 offices and has 813,226 corporate members. For its part, Caja Rural del Mediterráneo, Ruralcaja, which is the result of the merger of the rural credit cooperatives of Alicante, Elche, Valencia and Credicoop from Castellón, led the creation of Grupo Cajas Rurales del Mediterráneo in 2010, whose parent company is Ruralcaja. After the incorporation of Caja Rural de Villar, Sociedad Cooperativa de Crédito Valenciana in 2011, the group is formed by the following credit cooperatives: Caja Rural del Mediterráneo, Ruralcaja, S.C.C. (parent company) Caixa Rural Altea, C.C.V Caja Rural S. Roque de Almenara S.C.C.V. Caixa Rural de Callosa d'en Sarrià, C.C.V. 13

15 Tools used in the consolidation process Caja Rural S. José de Burriana, S.C.C.V. Caixa Rural Torrent C.C.V. Caja Rural S. Jaime Alquerías del Niño Perdido, S.C.C.V. Caja Rural de Cheste, S.C.C. Caja Rural S. José de Nules S.C.C.V. Caja Rural de Villar, S.C.C.V. Caja Rural La Junquera de Chilches, S.C.C.V. Caixa Rural S. Josep de Vilavella, S.C.C.V. Caja Rural S. Isidro de Vilafamés, S.C.C.V. Caja Rural de Alginet, S.C.C.V. Crèdit València, Caja Rural, C.C.V. The total assets of credit cooperatives that make up Grupo Cooperativo Cajas Rurales del Mediterráneo (CRM) amounts to a total of 11.7 billion euros, a joint net profit of 11 million euros and a membership base of 290,000 corporate members. Another process that is enabling financial entities to grow is the one that occurred in the summer of 2011 regarding Caja Rural del Sur. This is the case of Grupo Cooperativo Ibérico, which is made up of the following entities: Caja Rural del Sur, S.C.C. (parent company) Caja Rural de Extremadura, S.C.C. Caja Rural de Córdoba, S.C.C. Grupo Cooperativo Ibérico label has over 180,000 partners, over 7 billion euros assets and joint profits of over 17 million euros. Combined, the three entities have 490 offices and over 1,360 employees. Finally, 6 entities created the so-called Grupo Cooperativo Solventia, also in 2011, which later on that year became a consolidated group of credit institutions. Together with Caja Rural de Almendralejo, Sociedad Cooperativa de Crédito, as the parent company of the consolidated group, is finally composed of the following credit cooperatives: 14

16 Tools used in the consolidation process Caja Rural de Almendralejo, S.C.C. (parent company) Caja Rural de Utrera, S.C.A.C. Caja Rural de Baena Ntra. Sra. Guadalupe, S.C.C.A. Caja Rural Ntra. Sra. del Rosario, S.C.A.C. Caja Rural de Cañete de las Torres Ntra. Sra. del Campo, S.C.A. Caja Rural Nuestra Madre del Sol, S.C.A.C. The total assets of the entities included in Grupo Cooperativo Solventia, which has nearly 21,700 partners, amount to a total of over one billion euros. As for the profits, the amount increases to nearly 6 million euros. All together it generates more than 200 jobs in their 63 offices. Another strategy chosen by credit cooperatives to grow is merging. Some of these mergers have already been mentioned when reviewing the configuration of the 4 consolidated groups. Meanwhile, for other credit cooperatives, this was the only formula used. Now we will review the main integration processes of this kind. In 2011, a new credit cooperative called Nueva Caja Rural de Aragón, commercially known as Bantierra, was founded. Bantierra was born from the union of two entities with a long record in the sector: Caja Rural Aragonesa y de los Pirineos (Multicaja) and Caja Rural de Aragón (Cajalón). During the consolidation process they used the figure of second grade credit cooperative as an intermediate step towards their integration. Meanwhile, both entities were the result of previous mergers. This way, Multicaja has its origins in the merger in 2001 between Caja Rural de Huesca, founded in 1964 and Caja Rural de Zaragoza, founded in Later on in 2009, Caja Abogados, Sociedad Cooperativa de Crédito, joined them. Meanwhile, Cajalón, Caja Rural de Aragón, founded in 1967 in Calatayud, had already integrated Caja Rural de Cariñena through a merger by acquisition in These entities have been the only ones using the figure of the second grade credit cooperative for 15

17 Tools used in the consolidation process the integration of both entities during the consolidation process. The new entity resulting from the merger between Multicaja and Cajalón has assets of nearly 6 billion euros, 108,810 members and 322 offices with 989 employees. Also during 2011, Caja Rural de Albacete, Ciudad Real y Cuenca came into being, adopting Globalcaja as a trade name and operating as a single entity since 21 November, as a result of the sum of Caja Rural de Albacete, Caja Rural de Ciudad Real and Caja Rural de Cuenca, through an operation that they themselves called a merger of equals. Before the creation of the new entity, Caja Rural de Albacete had already merged with Caja Rural de la Roda. At the end of 2011, the new entity had assets of almost 4.8 billion euros, 98,049 members in its 251 offices and 955 employees. 16

18 In the last decade 2011 Grupo Cooperativo Solventia acquired the status of consolidated group In 2011, Grupo Cooperativo Solventia became a consolidated group of credit institutions, as provided in the Article 8 of the Law 13/1985 of 25 May on investment ratios, own funds and reporting obligations of the financial intermediaries, and in the second norm, paragraph 3, of the Bank of Spain Circular 3/2008 of 22 May on the determination and control of the credit institutions minimum own funds. Caja Rural de Almendralejo, Sociedad Cooperativa de Crédito became the parent company of the consolidated group, composed of the following credit cooperatives: Caja Rural de Almendralejo, S.C.C. (parent company) Caja Rural de Utrera, S.C.A.C. Caja Rural de Baena Ntra. Sra. Guadalupe, S.C.C.A. Caja Rural Ntra. Sra. del Rosario, S.C.A.C. Caja Rural de Cañete de las Torres Ntra. Sra. del Campo, S.C.A. Caja Rural Nuestra Madre del Sol, S.C.A.C. Incorporation of Caja Rural de Castellón into Grupo Cooperativo Cajamar On 27 May, 2011, the General Assembly of Caja Rural de Castellón S. Isidro, Sociedad Cooperativa de Crédito Valenciana, approved its integration into Grupo Cooperativo Cajamar, formed by the following credit cooperatives: Cajamar Caja Rural, S.C.C. (parent company) Caja de Crédito de Petrer, Caja Rural, C.C.V. Caja Rural de Castellón S. Isidro, S.C.C.V. Caixa Rural de Turís, C.C.V Caja Rural de Casinos, S.C.C.V. Caixa Rural de Albalat dels Sorells, C.C.V. Incorporation of Caja Rural de Villar to Grupo Cooperativo Caja Rural del Mediterráneo On 13 May, 2011, the General Assembly of Caja Rural de Villar, Sociedad Cooperativa de Crédito Valenciana, approved its integration into Grupo Cooperativo Caja Rural del Mediterráneo, formed by the following credit cooperatives: 17

19 In the last decade Caja Rural del Mediterráneo, Ruralcaja, S.C.C. (parent company) Caixa Rural Altea, C.C.V Caja Rural S. Roque de Almenara S.C.C.V. Caixa Rural de Callosa d'en Sarrià, C.C.V. Caja Rural S. José de Burriana, S.C.C.V. Caixa Rural Torrent C.C.V. Caja Rural S. Jaime Alquerías del Niño Perdido, S.C.C.V. Caja Rural de Cheste, S.C.C. Caja Rural S. José de Nules S.C.C.V. Caja Rural de Villar, S.C.C.V. Caja Rural La Junquera de Chilches, S.C.C.V. Caixa Rural S. Josep de Vilavella, S.C.C.V. Caja Rural S. Isidro de Vilafamés, S.C.C.V. Caja Rural de Alginet, S.C.C.V. Crèdit Valencia, Caja Rural, C.C.V. Creation of Caja Rural de Albacete, Ciudad Real, Cuenca (Globalcaja) In 2011, the entity Caja Rural de Albacete, Ciudad Real y Cuenca, Sociedad Cooperativa de Crédito, created as a result of the merger of Caja Rural de Albacete, Sociedad Cooperativa de Crédito, Caja Rural de Ciudad Real, Sociedad Cooperativa de Crédito and Caja Rural de Cuenca, Sociedad Cooperativa de Crédito, definitively entered in the Bank of Spain Special Registry of Credit cooperatives. Merger by acquisition of Caja Campo by Cajamar On 9 June, the Assemblies of Cajamar and Caja Campo, Caja Rural, Sociedad Cooperativa de Crédito unanimously approved the merger of the latter into the former. On 17 October, Caja Campo was withdrawn from the Special Registry of Credit cooperatives. Creation of Nueva Caja Rural de Aragón In September 2011, the entity Nueva Caja de Aragón, Sociedad Cooperativa de Crédito, definitively entered in the Bank of Spain Special Registry of Credit cooperatives. Subsequently, in December 2011, Caja Rural de Aragón, Sociedad Cooperativa de Crédito and Caja Rural Aragonesa y de los Pirineos, Sociedad Cooperativa de Crédito were withdrawn from the Registry due to their merger by acquisition by Nueva Caja de Aragón, Sociedad Cooperativa de Crédito, which changed its name to Nueva Caja Rural de Aragón, Sociedad Cooperativa de Crédito. Grupo Cooperativo Ibérico de Crédito became a consolidated group Also in September 2011, Grupo Cooperativo Ibérico de Crédito became a consolidated group of credit institutions, as provided in the Article 8 of Law 13/1985 of 25 May on investment ratios, own funds and reporting obligations of financial intermediaries and the second norm, paragraph 18

20 In the last decade 3, of the Bank of Spain Circular 3/2008 of 22 May on the determination and control of the credit institutions minimum own funds and designated Caja Rural del Sur, Sociedad Cooperativa de Crédito, as the parent company of the consolidated group, formed by the following credit cooperatives: Caja Rural del Sur, S.C.C. (parent company) Caja Rural de Extremadura, S.C.C. Caja Rural de Córdoba, S.C.C Grupo Cooperativo Cajas Rurales del Mediterráneo, CRM, became a consolidated group During 2010, Grupo Cooperativo Cajas Rurales del Mediterráneo, CRM, became a consolidated group of credit institutions as provided in the Article 8 of the Law 13/1985 of 25 May on investment ratios, own funds and reporting obligations of the financial intermediaries and in the second norm, paragraph 3, of the Bank of Spain Circular 3/2008 of 22 May on the determination and control of the credit institutions minimum own funds and Ruralcaja became the parent company of the consolidated group, formed by the following credit cooperatives: Caja Rural del Mediterráneo, Ruralcaja, S.C.C. (parent company) Caixa Rural Altea, C.C.V Caja Rural S. Roque de Almenara S.C.C.V. Caixa Rural de Callosa d'en Sarrià, C.C.V. Caja Rural S. José de Burriana, S.C.C.V. Caixa Rural Torrent C.C.V. Caja Rural S. Jaime Alquerías del Niño Perdido, S.C.C.V. Caja Rural de Cheste, S.C.C. Caja Rural S. José de Nules S.C.C.V. Caja Rural La Junquera de Chilches, S.C.C.V. Caixa Rural S. Josep de Vilavella, S.C.C.V. Caja Rural S. Isidro de Vilafamés, S.C.C.V. Caja Rural de Alginet, S.C.C.V. Crèdit Valencia, Caja Rural, C.C.V. Incorporation of several credit cooperatives into Grupo Cooperativo Cajamar In 2010, Caja de Crédito de Petrer, Caja Rural, Cooperativa de Crédito Valenciana, Caixa Rural de Turís, Cooperativa de Crédito Valenciana and Caixa Rural de Albalat dels Sorells, Cooperativa de Crédito Valenciana joined Grupo Cooperativo Cajamar. The group was formed by the following credit cooperatives: 19

21 In the last decade Cajamar Caja Rural, S.C.C. (parent company) Caja de Crédito de Petrer, Caja Rural, C.C.V. Caixa Rural de Turís, C.C.V Caja Rural de Casinos, S.C.C.V. Caixa Rural de Albalat dels Sorells, C.C.V. Merger by acquisition of Caja Rural de La Roda by Caja Rural de Albacete In December 2010, the merger by acquisition of Caja Rural de La Roda, Sociedad Cooperativa de Crédito by Caja Rural de Albacete, Sociedad Cooperativa de Crédito took place. On 9 February, 2011, Caja Rural de La Roda was withdrawn from the Special Registry of Credit cooperatives. Merger by acquisition of Caixa Rural de Balears by Cajamar In December 2010, the merger by acquisition of Caixa Rural de Balears, Sociedad Cooperativa de Crédito by Cajamar took place. On 12 January, 2011, Caja Rural de Balears was withdrawn from the Special Registry of Credit cooperatives. Grupo Cooperativo Cajamar became a consolidated group 2009 During 2009, Grupo Cooperativo Cajamar became a consolidated group of credit institutions as provided in the Article 8 of the Law 13/1985 of 25 May on investment ratios, own funds and reporting obligations of the financial intermediaries and in the second norm, paragraph 3, of the Bank of Spain Circular 3/2008 of 22 May on the determination and control of the credit institutions minimum own funds and Cajamar became the parent company of the consolidated group, formed by the following credit cooperatives: Cajamar Caja Rural, S.C.C. (parent company) Caja Campo, Caja Rural, S.C.C. Caja Rural de Casinos, S.C.C.V. Merger by acquisition of Caja de los Abogados by Caja Rural Aragonesa y de los Pirineos In 2009 the merger by acquisition of Caja de los Abogados, Sociedad Cooperativa de Crédito by Caja Rural Aragonesa y de los Pirineos took place. On May 28, 2010, Caja de los Abogados was withdrawn from the Special Registry of Credit cooperatives. 20

22 In the last decade Withdrawal of Caja Caminos due to its transformation into a bank 2008 In 2008, Caja Caminos, Sociedad Cooperativa de Crédito was withdrawn due to its transformation into a bank Merger by acquisition of Caja Rural del Duero by Cajamar In 2007 the merger by acquisition of Caja Rural del Duero, Sociedad Cooperativa de Crédito by Cajamar took place. On 8 February, 2008, Caja Rural del Duero was withdrawn from the Special Registry of Credit cooperatives. Merger by acquisition of Caja Rural de Elche by Caja Rural de Valencia 2004 In 2004 the merger by acquisition of Caja Rural de Elche, Sociedad Cooperativa de Crédito by Caja Rural de Valencia took place. On 4 February, 2004, Caja Rural del Elche was withdrawn from the Special Registry of Credit cooperatives Merger by acquisition of Cobanexpo by Caja Rural de Navarra On 13 January, 2003, Caja Rural Cobanexpo, Sociedad Cooperativa de Crédito was removed from the Bank of Spain Special Registry of Credit cooperatives as a result of its merger by acquisition by Caja Rural de Navarra, Sociedad Cooperativa de Crédito. Merger by acquisition of Caja Rural de Alicante and Caja Rural Credicoop by Caja Rural de Valencia 2002 On 28 May, 2002, Caja Rural de Alicante, Sociedad Cooperativa de Crédito and Caja Rural Credicoop, Sociedad Cooperativa de Crédito merged with Valencia Caja Rural, Sociedad Cooperativa de Crédito. On 1 July, 2002, Caja Rural de Alicante and Caja Rural Credicoop were withdrawn from the Special Registry of Credit cooperatives. 21

23 In the last decade Creation of Caja Rural Aragonesa y de los Pirineos In 2002, the entity Caja Rural Aragonesa y de los Pirineos, Sociedad Cooperativa de Crédito was definitively entered in the Bank of Spain Special Registry of Credit cooperatives promoted by Caja Rural de Zaragoza, Sociedad Cooperativa de Crédito and Caja Rural de Huesca, Sociedad Cooperativa de Crédito. Merger by acquisition of Caja Rural del Campo de Cariñena by Caja Rural de Aragón On 13 November, 2002, Caja Rural del Campo de Cariñena, Sociedad Cooperativa de Crédito merged with Caja Rural de Aragón, Sociedad Cooperativa de Crédito. On 12 December, 2002, Caja Rural del Campo de Cariñena was withdrawn from the Special Registry of Credit cooperatives. Creation of Caja Rural del Sur In early 2002, the entity Caja Rural del Sur, Sociedad Cooperativa de Crédito was definitively entered in the Bank of Spain Special Registry of Credit cooperatives promoted by Caja Rural de Huelva, Sociedad Cooperativa de Crédito and Caja Rural de Sevilla, Sociedad Cooperativa de Crédito. Renaming of Caixa Rural de Lugo On 21 January, 2002, la Caixa Rural de Lugo, Sociedad Cooperativa de Crédito, changed its name to Caixa Rural Galega, Sociedad Cooperativa de Crédito. Renaming of Caja Rural de Valencia On 21 June, 2002, Caja Rural de Valencia, Sociedad Cooperativa de Crédito, changed its name to Caja Rural del Mediterráneo, Ruralcaja, Sociedad Cooperativa de Crédito. Renaming of Caja Rural los Santos de la Piedra de Albalat dels Sorells On 16 September, 2002, Caja Rural los Santos de la Piedra de Albalat dels Sorells, Cooperativa de Crédito Valenciana changed its name to Caixa Rural Albalat dels Sorells, Cooperativa de Crédito Valenciana. Renaming of Caja Rural de la Valencia Castellana On 13 December, 2002, Caja Rural de la Valencia Castellana, Sociedad Cooperativa de Crédito changed its name to Caja Campo, Caja Rural, Sociedad Cooperativa de Crédito. 22

24 The figures taking part in the consolidation process In early 2008, the credit cooperative sector was very fragmented, as the average volume of assets was fewer than 1.4 billion euros. This situation changed completely in 2011 after the consolidation process continued and thanks to the emergence of consolidated cooperative groups in the credit cooperative sector. At the start of the crisis, back in 2008, the credit cooperative sector was very fragmented and it had been gradually contracting to the 81 existing credit cooperatives in Altogether, they managed a total set of assets of just over 113 billion euros, that is to say, 3.68% of the total assets held by all the deposit-taking institutions operating in Spain at that time. The average volume in the same year for a credit cooperative was about 1.39 billion euros, representing a much smaller average size than the one exhibited by the sector of savings banks. According to the information provided by their employers association, that figure stood at 28.5 billion euros at that time. That same year, the top 10 credit cooperatives, according to the total set of assets, had an average size of 8.1 billion euros and managed 7 out of 10 euros. Other credit cooperatives 28,13% TOTAL ASSETS. YEAR 2008 Top 10 credit cooperatives 71,87% Provided by Unacc (National Union of Credit Cooperatives) Orihuela, Gijón, Navarra, Salamanca, Soria, Fuente Álamo, Granada, Ingenieros, Laboral, Jaén, Galega, Cajasiete, Teruel, Castilla La Mancha, Ipar Kutxa, Zamora, Alcudia, Vall d Uxo Católico Agraria Almendrejo, Utrera, Ruralcaja, Nules, Villar, Chilches, Vilavella, Vilafamés, Alginet, Credit Valencia Cañete de las Torres, Nueva Carteya, Baleares, Caja Campo, Burgos, Segovia, Petere, Castellón, Turís, Fuente Pelayo, Casinos, Albalat, La Roda Crédito Cooperativo, Caixa Popular, Benicarló, Coves de Vinrona, Vinaros, Arquitectos, Albal, Sur, Extremadura, Córdoba, Canarias, Cheste, Asturias Alquerías La Vall, Alcora, Mota del Cuervo, Algemesí, Casas Ibáñez, Amasora, Onda, Betxi, Guisona, Villamalea Baena, Adamuz, Cajamar, Altea, Almenara, Callosa, Burriana, Torrent, Albacete, Cuenca, Ciudad Real Aragón, Multicaja, Abogados y Casteldans From this starting scenario at the beginning of the crisis, we move to a radically new one. The picture changes for two reasons: firstly, due to the mergers that took place and decreased the number of credit cooperatives up to the current 74; secondly, and more importantly, due to the creation of consolidated groups that have allowed an unprecedented concentration of assets in the sector, forming 48 consolidated groups at yearend

25 The figures taking part in the consolidation process CAJA RURAL DE ALBACETE, CIUDAD REAL Y CUENCA NUEVA CAJA RURAL DE ARAGÓN CAJA RURAL DE NAVARRA GRUPO IBÉRICO DE CRÉDITO GRUPO CAJAMAR GRUPO CRM Asturias, Ingenieros, Jaén, Zamora, Cajasiete, Teruel, Canarias, Soria, Burgos, Orihuela, Grupo Solventia, Arquitectos, Caixa Popular, Salamanca, Galega, Gijón, Guissona, Villareal, La Vall, Segovia, Fuente Álamo, Onda, Algemesí, Almassora, Alcora, L Alcudia, Benicarló, Vall D Uxo, Vinarós, Credito Cooperativo, Mota del Cuervo, Betxi, Albal, Villamalea, Casas Ibáñez, Coves de Vinroma, Fuentepelayo, Castelldans CAJA LABORAL POPULAR IPAR KUTXA CAJA RURAL DE GRANADA CAJA RURAL CASTILLA LA MANCHA Despite the crisis, the credit cooperative sector ended up managing 127 billion euros in 2011, which means that assets under management increased by more than 12% over 2008 figures. At year-end 2011, the top 10 credit cooperatives, according to the total assets, have significantly grown to manage, at the end of 2011, more than 96.5 billion euros, or 76% of the total sector, representing a gain of more than 4 percentage points. If we consider the consolidated groups, this trend intensifies and, as a result, 4 out of 5 euros are managed by the 10 largest consolidated groups, which gives us an idea of the importance of this new figure in the context of consolidation of the cooperative sector. Other credit cooperatives 19,29% TOTAL ASSETS. YEAR 2011 The average volume of assets held by credit cooperatives increased in 2011, rising up to more than 1.7 billion euros, that is, a 23% increase over the sector figures for This is because, as we have seen: firstly, the total number of entities making up the sector has decreased and, secondly, the total assets managed by credit cooperatives have increased.. Provided by Unacc (National Union of Credit Cooperatives) Top 10 credit consolidated groups 80,71% 24

26 Gaining size without losing identity After all these processes, the capital base of credit cooperatives increased since they gained half a million members in five years, with cumulative decreases in employment and number of offices of only 2% throughout the crisis. Furthermore, we must bear in mind that even with 1 in 3 offices in municipalities with fewer than 5,000 inhabitants, they still return wealth to the community through the Education and Promotion Fund. As there is a strong concentration of the number of entities, particularly in the number of consolidated groups, the credit cooperative sector maintains, and, in some cases, enhances their characteristic features and identity. Thus, in a particularly tough economic environment, they have managed to increase their capital base in a truly spectacular way, as they addressed under two million members in 2006 and closed in 2011 with a membership base which included nearly two and a half million members, representing the incorporation of more than half a million new members in five years. Out of the 2,438,052 credit cooperative members, more than 9,000 are cooperatives and 174,110 are entities, mainly SMEs. As for employment levels and number of offices, since 2007 there have been recorded losses of only 2% in the number of offices and employees. This shows the advantages of this model, both because of the fight against financial exclusion in our country, and for securing employment in times of extreme economic hardship and strong restructuring of the sector. Regarding employment, at year-end 2011, the credit cooperatives created jobs for 20,036 employees, 42% of which were women. NUMBER OF CREDIT COOPERATIVES, OFFICES, EMPLOYEES AND PARTNERS year CREDIT COOPERATIVES OFFICES EMPLOYEES PARTNERS Provided by Unacc (National Union of Credit Cooperatives). Source: Bank of Spain In the case of credit cooperatives, it is not only necessary to analyze the total number of offices, but also their geographical location. This meaning that an adequate geographical analysis should allow us to discriminate offices based on where they are located. This is because, from its humble origins, credit cooperatives arose from the need to fill the gap left by banks in industrial and rural areas of nineteenth century Europe, and snatching territories and industries to usurers. Therefore, since the very beginning, the fight against financial exclusion has been one of their fundamentals. Based on that analysis, it appears that in 2011, out of a total of 4,928 offices, 2,870 are located in towns with fewer than 25,000 inhabitants, of which 1,754 are in municipalities with a 25

27 Gaining size without losing the identity population of less than 5,000 registered people. That means that more than 1 in 2 offices are in municipalities of less than 25,000 inhabitants and 1 in 3 in municipalities of less than 5,000. Another main feature of credit cooperatives is the linkage to the community in which they operate, reinvesting part of their profits in it. In the case of credit cooperatives and the rest of organisations with a cooperative base, there is the so-called Education and Promotion Fund (EPF), which must be equipped with a mandatory percentage of their annual benefits. This percentage rises to 10% for credit cooperatives and must be used for: training and education of their members and workers in the cooperative principles and values, the spread of cooperation, cultural promotion and professional welfare of the local or community environment, as well as for improving the quality of life and the community development and environmental protection actions. solidarity. The main idea is to create wealth instead of postponing debt for the generations to come. Not only do these entities not transfer their losses to the government but they also aim to create and keep the wealth for future generations. After the severe reorganization of savings banks, this Fund has become more and more important towards the improvement of the community. Only in 2011, credit cooperatives have made allocations for the Education and Promotion Fund of over 20 million euros. These are the core actions of a model based on an inter-generational 26

28 The near future The pace of consolidation in the credit cooperative sector remains high. The last few months have brought other integrations, such as the merger of Burgos, Segovia, Fuentepelayo and Casteldans, the integration of Caja Rural de Canarias and Grupo Cooperativo Cajamar, and the merger of Castellón with Cajamar, among others. Also, other processes between larger entities have occurred, such as the creation of Cajas Rurales Unidas under the auspices of Cajamar and Ruralcaja, or the recent news about the common cooperative project between Caja Laboral and Ipar Kutxa. It is essential to closely follow these processes in order to foresee the new cooperative banking map. In order to get a broader and updated view of the situation in this sector, we cannot forget ongoing processes, which will most probably finish by the end of this fiscal year. It is important to note that various consolidated operations were announced at the end of As expected this year, the holding of the General Assemblies of Caja Rural de Burgos, Caja Rural de Segovia, Caja Rural de Fuentepelayo and Caja Rural San Fortunat de Casteldans are expected to approve their merger process, which would result in a credit cooperative of 1.4 billion euros worth assets (at year-end 2011) and a profit of 4.7 million euros. Also in late 2011, we found out that Caja Rural de Canarias had agreed to join the Cajamar group at the Assembly of 22 December. This way, Caja Rural de Canarias became the seventh entity joining Grupo Cooperativo Cajamar, providing assets of nearly 1.3 billion euros, 67 offices, 325 employees and 23,676 members at the end of last year. Movements in the Cajamar group also affected institutions that were already part of the group, such as Caja Rural de Castellón. Although this institution was already part of Grupo Cooperativo Cajamar, since mid last year, it wanted to take a further step in the integration process, and therefore on 28 February, 2012, the Board of Governors of Caja Rural de Castellón approved its merger by acquisition by Cajamar, as Caixa Rural Balears and Caja Campo had already done in the past. But the biggest news was the merger of Ruralcaja and Cajamar, becoming Cajas Rurales Unidas, approved by their respective Board of Governors on 15 December, Later on, on 17 January, 2012, both companies Assemblies also approved the merger. According to their press releases, the merger project will join the respective groups headed by these two entities, Grupo Cooperativo Cajamar and Grupo Cooperativo Cajas Rurales del Mediterráneo. This movement will place Cajas Rurales Unidas among the top 20 largest entities by amount of assets in Spain. At present, these two credit cooperatives, not counting their consolidated groups, sum up 39.2 billion euro worth assets, over 6,528 employees and 988,390 partners. When the process is completed, the new entity would be the largest in the sector with 30% of the total volume of assets. 27

29 The near future We recently found out that Caja Laboral and Ipar Kutxa are discussing the merger of both companies into a common cooperative project. As a result, the new entity would become the second largest credit cooperative in terms of assets in the country, almost reaching the 25 billion euros, with over 2,500 employees and 8,791 partners. This information suggests a scenario where the credit cooperative sector would be composed of 68 individual entities, 40 of which would belong to a consolidated group. Although all processes are not yet closed, it is worth noting that the possible outcomes of these consolidation processes will be very interesting and are expected to follow the trend set at the beginning of the crisis. That is, a decrease in the number of entities, which we hope will go hand in hand with the increase in the volume of managed assets in the sector. 28

30 Last updates The integration processes previously announced have maintained cruising speed during As such, in July 2012, the forecast for this year-end is a census of 68 credit cooperatives operating in Spain, 31 of which would be integrated into three cooperative groups. At the end of 2012 all the processes aforementioned have been successfully consolidated. In this section we will punctually present updates with all the news of 2012, which, due to the fact that they occurred subsequent to the restructuring report, they were therefore not reflected in it. This will allow the information on the restructuring process of the Spanish credit cooperative sector that was previously analyzed in the report about restructuring to be complete, and reflect all events relating to the operations that are drawing the new map of our sector. In July of 2012, some of the processes announced in the section Near future have already come to an end, while others have experienced a significant progress. Thus, following the approval by their respective General Assemblies, the merger of Cajas Rurales de Burgos, Segovia, Fuentepelayo and San Fortunat de Castelldans, which they announced at the end of last year, has come to an end, resulting in Caja Rural de Burgos, Fuentepelayo, Segovia y Castelldans, S.C.C. Also in the first quarter of 2012, the process of incorporating Caja Rural de Canarias to Grupo Cooperativo Cajamar, which began on 22 December with the approval of the General Assembly of Caja Rural de Canarias, was completed. The integration process of the two credit cooperatives with headquarters in the Basque Country, Laboral and Ipar Kutxa, is leapfrogging stages after their respective General Assemblies approval, last 30 June. The resulting cooperative would manage a volume of assets of approximately 25 billion euros, allowing them to continue to hold second place in volume of this sector, and significantly winning some distance over the nearest competitors. Finally, the macro operation that involves the merger of the first and third Spanish credit cooperatives, Cajamar and Ruralcaja has already been authorized by the Ministry of Economy and Competitiveness, and afer which it has taken over Caja Rural de Castellón San Isidro. This adds to the operations of the configuration of the new cooperative group, whose parent company will be the resulting entity called Cajas Rurales Unidas, and which, after the various incorporations that took place over the recent months, will include the following entities: Caja de Crédito de Petrel, Caja Rural de Turís, Caja Rural de Casinos, Caja Rural de Albalat dels Sorels, Caja Rural de Canarias, Caixa Rural de Altea, Caja Rural S. Roque de Almenara, Caixa Rural de Callosa d en Sarriá, Caja Rural S. José de Burriana, Caixa Rural Torrent, 29

31 * Integration processes in the credit cooperative sector Last updates Caja Rural S. Jaime Alquerías Niño Perdido, Caja Rural de Cheste, Caja Rural S. José de Nules, Caja Rural de Villar, Caja Rural La Junquera de Chilches, Caixa Rural S. Josep de Vilavella, Caja Rural S. Isidro de Vilafamés, Caja Rural de Alginet, Crèdit Valencia, Caja Rural Católico Agraria, and Caixa Rural Sant Vicent Ferrer de la Vall d Uixó Therefore, with the data available to us right now, the total number of credit cooperatives, which at the end of 2011 amounted to a total of 74 entities, is expected to decrease in number, due to the disappearance of 9 entities and the creation of 3 new credit cooperatives resulting from the mergers. As a result, at this point the expected number of credit cooperatives operating in Spain by the end of 2012 is 68, out of which 31 will be integrated in 3 cooperative groups: Cajas Rurales Unidas, Ibérico and Solventia. Credit cooperatives In figures credit cooperatives Provided by Unacc (National Union of Credit Cooperatives) consolidated groups * 2012 forecast The remaining 37, some of which were the result of a merger that allowed them to increase in size, will continue their course independently. We must note that the big difference in terms of assets among them is particularly significant. This way, while the resulting entity from the merger of Caja Laboral and Ipar Kutxa already includes a third of the total assets, it takes 30 cooperatives to reach another 30%. At the end of 2012 all the processes aforementioned have been successfully consolidated * 40* 30

32 Unión Nacional de Cooperativas de Crédito Alcalá Madrid T F unacc Todos los derechos reservados Los análisis y opiniones vertidas en el presente informe han sido elaborados por la Unacc y no reflejan, necesariamente, los de las Cooperativas de Crédito asociadas. Los datos que figuran en este informe proceden de fuentes fiables y han sido cuidadosamente contrastados. No obstante, la Unacc no puede asegurar su exactitud o posterior revisión. Se permite la reproducción para fines docentes o sin ánimo de lucro, siempre que se cite la fuente.