Rural Fund Concept
The rural banks constitute the most relevant group within the Spanish credit cooperative, both for their territorial presence (in most of the Spanish provinces), and for their numerical, economic, corporate and labor dimension.
Their operational scope can be local, regional, provincial or national, and they were generally promoted by agricultural cooperatives.
The rural savings banks originally played an almost exclusive role in financing the agricultural sector and the rural environment in general, in all Spanish counties and provinces.
Evolution of rural banks in Spain
The Spanish Association of Rural Savings Banks is an instrument for coordination and a forum for debate, and this institution also serves to set the priorities, strategies and policies of the Caja Rural Group. It was born in 1989 when twenty-three Rural Banks, which until then belonged to the Associated Group Banco de Crédito Agrícola – Associated Rural Banks, created the Spanish Association of Credit Cooperatives, whose name later changed to the Spanish Association of Rural Banks. Subsequently, fifty-four more Rural Savings Banks have joined the association.
Currently, the entities of the Spanish Association of Rural Savings Banks are setting up three groups, which are pending authorization from the Bank of Spain: the Cajas Rurales del Mediterráneo Group, the Group and SIP advised by Cuatrecasas (formerly advised by Garrigues) and the AFI-advised group. The purpose of the three groups is to be a common instrument at the service of the future development of their entities and the increase in the solvency and efficiency of the founding or adhering savings banks.
Purposes of rural savings banks
– Promote the confidence of society in Rural Savings Banks and, in general, in cooperative credit and disseminate the philosophy and principles that make up their specific and exclusive business culture.
– Promote the activities of the Group’s Rural Savings Banks and coordinate their representation before Public Administrations and other Institutions.
– Promote the development of the principles of solidarity and reciprocal support among the Associated Rural Banks.
– Coordinate the actions of Rural Savings Banks in investee companies of the Group.
– Promote the creation, where appropriate, of new investee companies that contribute to the fulfillment of common goals by achieving economies of scale and improving service to partners or customers.
– Organize common services for the Rural Banks of the Group with specific tasks of a technical, legal, statistical, training, commercial, documentary nature, etc.
– Manage, administer and dispose of the mutual and solidarity guarantee funds constituted by the Caja Rural Group.
Mergers between Rural Savings Banks
Since 2009 the environment of Spanish credit cooperatives has changed radically after the appearance of groupings in the form of mergers or the Institutional Protection System (SIP) and Cooperative Groups. These changes have meant that the traditional regional or provincial scope that rural savings banks had has disappeared.
Credit cooperatives were pioneers in Spain in the application of this concentration formula; Specifically, Cajamar’s SIP was the first to be authorized by the Bank of Spain, in December 2009.
In this context, the advent of the financial crisis between 2007 and 2008 coincided with a reorganization process that seemed to be taking place years before, and whose maximum exponent had been twenty years ago, the constitution, in 1989, of the Group Caja Rural, endowed with Banco Cooperativo Español SA and other specialized entities such as the insurance company RGA and the technological services company RSI.
The various attempts to reach a model of greater concentration and cohesion, raised since 2001, the internal evolution of the sector itself and the recommendations of the Bank of Spain, put on the table the possible application of the European regulations of 2006 on the institutional protection systems. This evolutionary process, together with the new circumstances of the global financial sector as a whole from the year 2008, became the scenario that would lay the foundations of the current, and still inconclusive, map of Spanish rural banks.
Between 2000 and 2008, various merger processes between credit cooperatives took place, although it is in 2009-2010 when the current reorganization of the sector began.
The recent grouping phenomenon of Spanish cooperative banking, the largest and deepest or most compromised in its history, clearly coincides with the international banking reordering caused by the global financial crisis.
Thus, the 73 Spanish rural banks associated in the Caja Rural Group have gone from being made up of four groups:
1- Grupo Cajas Rurales Unidas: Formed after a merger (Prior to the constitution of two SIPs: Cooperative Group Cajamar and Grupo Cajas Rurales del Mediterráneo).
It would be made up of: Cooperative Group Cajamar (Cajamar Caja Rural – merger of Cajamar with Caja Rural del Duero, Caixa Rural Balears and Caja Campo – , Caixa Rural de Casinos, Caixa Albalat, Caixa Petrer, Caixa Turis, Caja Rural Castellón, Caja Rural de Canarias), Cajas Rurales del Mediterráneo (Ruralcaja, Caixa Rural Torrent, Crèdit València Caja Rural, Caixaltea, Caja Rural de Burriana, Caixa Callosa, Caixa Rural Nules, Caixa Alqueries, Caja Rural de Cheste, Caixa Rural d’Alginet, Caja Rural de Villar, Caixa Rural Vilavella, Caixa Rural Almenara, Caixa Rural Xilxes and Xaixa Rural Vilafamés).
2- Cajaviva: result of the merger of the Rural Banks of Burgos, Fuentepelayo, Segovia and Castelldans.
3- Bantierra: Formed after a merger (Previous merger of Caja Rural de Aragón and Caja Rural de Campo de Cariñena; and Caja de los Abogados and Caja Rural Aragonesa y de los Pyrenees.
Made up of Multicaja and Cajalón.
4- Globalcaja: result of the merger of the Rural Banks of Albacete, Ciudad Real and Cuenca.
5- Iberian Credit Group: It is formed by means of a SIP between Caja Rural del Sur, Caja Rural. of Extremadura and Caja Rural de Córdoba.
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