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Popular credit movement in Italy In Dating back to the second half of the 1800s, when the model of Herman Schulze-Delitzsch Volksbanks was adapted to the Italian context, Popular Banks were the country’s first cooperatives. They have gone through radically contrasting phases of development over the years, reflecting their interaction with the national economy change and the banking system organization. After the Second World War Popular Banks began gradually to recovery market share. Popular Banks’ market share fluctuated around 10% until 1970 and their number diminished, while the number of their branches rose from just over 1,000 to around 2,000. The latest period, lasting up to today, is one of continual growth, with Popular Banks’ market share doubling to regain the peak levels recorded early in their existence. The role of small and medium-sized businesses and locally-based production attained an importance without parallel in the other leading industrial countries. Among the most striking features typifying the Italian economy is the large number of firms. According to official statistics, there were more than 4 million businesses in operation in 2000. The financial structure of small and medium-sized companies basically consists of self-financing and bank credit. Accordingly, their natural financial interlocutors tend to be “locally-focused” banks as Popular Banks are. There was further consolidation between Popular Banks, whose branch networks continued to expand.
At the end of the 1970s some of the largest cooperative banks sought and obtained stock exchange listing, in order to favour the circulation of their shares and facilitate the raising of fresh equity capital.
At the end of 2003 there were 58 Popular Banks in operation in Italy, of which 39 had retained the form of cooperative society and 19 had been transformed into public companies limited following the transfer of control to a cooperative bank holding company. This structure is the outcome of prolonged consolidation within the category, a process dating back to the 1930s and still under way. In recent times the pace of consolidation has quickened with the adoption of new, more liberal legislative framework for the sector, harmonized with the rules of the single European market.
In contrast with this process of concentration, the branch network has expanded regularly and now comprises almost than 7,500 units (one fifth of the total for the Italian banking system). Therefore, among Popular Banks it is possible to find institutes of every dimension, from small local banks to large nationwide operating groups, competing, at all geographical level, against other kind of banks and against each other as well. In fact, in Italy there are no limits to banking competition neither in geographical sense nor inside the various categories of Banks.
The Popular Banks’ network serves 2,558 municipalities, representing 44% of all municipalities with bank branches. It is densest in the North of Italy, and particularly in the regions of Lombardy and Veneto, where Popular Banks account for 32 per cent of all bank branches in municipalities with between 6,000 and 30,000 inhabitants.
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