Credit Mutuel (1995)

    This document has been made available in electronic format
         by the International Co-operative Alliance ICA 
                         13 September 1995

                           CREDIT MUTUEL


Ranking as the fifth biggest bank in France in terms of
deposits, Credit Mutuel is a national network of regional
banks on a European scale. The 3rd. "National Convention",
held on 27, 28 and 29 June, brought 3700 representatives to
Paris and ratified the group's decision to pursue controlled
development as a bank for individuals and the local community,
a neighbourhood bank at the service of regional development,
and a "bancassurance" specialist with a high degree of
technological and financial expertise. Credit Mutuel is a
mutualist bank with a strongly human dimension and, as such,
occupies a unique position within the French banking system.


With 3600 branches, making it the third biggest banking
network in France, Credit Mutuel is determined to stay close
to its customers. Branch network apart, this proximity is also
reflected in the quality of the relationship with its members
and customers that makes Credit Mutuel "the bank to talk to"
in terms of its welcome and its willingness to listen and
As a cooperative bank, Credit Mutuel is involved in a wide
variety of development and solidarity campaigns, either alone
or in partnership. This mutualist "extra" is expressed
particularly in the form of support for job-creation schemes
and for young people, sponsorship, funds to aid members in
difficulty or collective investments of an ethical nature.

Every branch of finance

Founded over 100 years ago, Credit Mutuel brings its
experience of every branch of banking to bear in its
relationships with all the economic players: individuals,
businesses and professionals, local authorities, associations.
Credit Mutuel is also a high-tech bank, ranked second in 1994
in credit card applications and taking the top slot among the
banks for card-based transactions with retailers.
In 1970, the group pioneered "bancassurance" and, with its
extensive network, has now become the biggest "bancassurance"
operator in the marketplace.
Continuing development along these three avenues - proximity,
new technologies, bancassurance - is the ambition the group
intends to pursue, helped by its 38.2 billion French francs
(FF) of equity - at 15.8%, the best solvency ratio of any of
the major banking groups - and by the human and technical
quality of its network.

Members, delegates, employees: the mutualist trinity

At the heart of the mutualist ethos lie the 30 000 unpaid
delegates elected by a general meeting of members on the "one
member, one vote" principle. In an organisation where
responsibilities are exercised at grass-roots level, these
delegates make up the boards of directors and supervisory
boards at every level - local, regional, national - that take
the decisions and run Credit Mutuel. Their duties are
performed in close liaison with the 22 000 staff who offer
customers a high quality of service.
In their respective monitoring or active roles in the "bank to
talk to", delegates and employees pursue one objective above
all: the economic and social advancement of members and
customers. The degree of commitment of group members,
associates and co-owners ranges from a subscription to one
share, with the exercise of its associated rights, to the role
of delegate representing members.


As a co-operative and mutualist bank, Credit Mutuel is
organised on three levels; local, regional and national.
Within this decentralised structure, responsibilities are
allocated in accordance with the principle of subsidiarity:
the level of organisation closest to the member, the local
Caisse, performs the main functions, with other levels
performing only those tasks the Caisse is not equipped to
handle. This original, bottom-up, type of organisation has its
origins in the history of the mutualist movement in France.

2000 local Caisses

The first level of the Credit Mutuel structure, and its very
foundation stone, is the 2000 local Caisses, open-ended
cooperative societies. These are banking institutions subject
to banking law: each local Caisse is financially autonomous,
taking deposits, granting loans and offering the full range of
financial services.
Each local Caisse has its own board of directors or
supervisory board, made up of delegates elected by members in
general meeting on the "one man, one vote" principle. Each
board elects its own chairman.
The 30 000 directors of the local Caisses are thus elected in
general meeting by the 5 million members.

18 Regional Groups

At the second level of organisation, each Regional Group
consists of a Regional Federation and a federal Caisse. Local
Caisses are members of the federation and are affiliated to
the federal Caisse.
The Regional Federation is the organ of control, strategy and
representation of Credit Mutuel in its region. The federal
Caisse performs banking services: cash management, the
provision of financial, technical and information technology
Federation and federal Caisse are equally administered by
boards elected by the local Caisses.
In addition to the eighteen Regional Federations, there is
also the Federation du Credit Mutuel Agricole et Rurale
(CMAR), a body with nationwide coverage, involved in

The National Confederation and the Caisse Centrale

The third level of organisation consists of the National
Confederation and the Caisse Centrale du Credit Mutuel.
The National Confederation is the central body of the network
in terms of the 1984 banking law. The 19 Federations and the
Caisse Centrale du Credit Mutuel are members of the
In addition to representing Credit Mutuel before the
authorities, the National Confederation also exercises control
over the Regional Groups, guaranteeing the cohesion of the
network and co-ordinating its development. Its board of
directors is elected by a general meeting of the Federations
at which each Federation is represented. The Chairman and
Deputy Chairman are also elected by the general meeting.

The Caisse Centrale de Credit Mutuel is the group's national
financial body. Its capital is owned by all the federal
Caisses. It guarantees the liquidity of the Regional Groups
and ensures financial solidarity. It designs and manages
financial services for the Groups and represents them before
various national authorities. The Caisse Centrale also
constitutes a centre of financial expertise in certain areas:
balance sheet management, capital market operations, gathering
of medium and long term resources.

Pooled resources

In order to improve the quality of services to customers and
reduce costs, Credit Mutuel has introduced pooled resources.
The Centre National des Moyens de Paiement (CNMP), set up in
1992, offers the Federations nationwide logistics guaranteeing
high quality card payment processing services. It acts as a
national approval centre, user advice centre, national remote
collection agency and centre for the management of fraud and
outstanding debts. The CNMP also handles the routing of
transactions in means of payment between national and
international centres, and internal clearing at Credit Mutuel
The Groupement Mutuel des Titres (GMT) handles securities for
all the group's Caisses, and it continued to operate at a
sustained level of activity in 1994, managing 1 240 000
securities accounts worth 190 billion FF, dispatching 540 000
stock market orders and handling 900 000 UCITS subscriptions
or purchases.

Also set up in 1992, Credit Mutuel Finance (CMF) is another
national service which handles UCITS for a major part of the
network: the 39 SICAV and FCP mutual investment funds totalled
24 billion FF at end 1994.


Credit Mutuel has set up a number of subsidiaries in order to
be able to offer a full range of services to its customers.
These subsidiaries generally service a number of Regional
Groups and cover the main areas of banking - corporate
lending, leasing, risk capital, development capital,
shareholdings, capital market, management and diversified
investments activities - as well as insurance, information
technology, card payment services and property. Credit Mutuel
also has subsidiaries in the spheres of travel and
The subsidiaries are also at the service of the network, and
complement its activity by providing specific skills in areas
where size is a critical factor in success.


A sluggish economy, constant whittling away of margins, the
continuing property crisis: for the third year in a row, 1994
was a bad year for the entire French banking sector. At the
end of this turning-point year, as the economy begins to move
out of recession, Credit Mutuel managed to maintain results on
a par with 1993 and to increase its market share. Proof enough
of the relevance of its strategy, based on staying close to
customers, keeping a tight grip on costs and investments, and
state of the art technological expertise.
The 3rd. Credit Mutuel National Convention, high spot of 1994,
opened up a vast field of ideas and proposals. As a forum for
free expression, the Convention provided an occasion to debate
the group's strategic direction for the years ahead: priority
is given to members, quality of service, greater cohesion
within the network while maintaining and strengthening
regional identities, a desire to contribute to local and
regional development as well as to solving the problems of our

The development dividend

Having opted for a determined strategy of development, Credit
Mutuel has increased its market share against a background of
fierce competition, to consolidate its position as France's
5th. largest banking group.
Despite a gloomy economic climate, in the absence of any real
recovery in either domestic or corporate demand, with the
financial world shaken by the difficulties experienced in
certain quarters, financial upheaval and fluctuating interest
rates, Credit Mutuel has continued to increase its market
share: +0.3% in deposits, making 6.7% of total deposits taken
by the banking institutions as a whole, and +0.4% in lending,
to 5.9% of all bank lending. Loans outstanding, in particular,
rose by nearly 5%.
As the leading structural lender in the market, Credit Mutuel
was hit hard by the drop in short rates. 1994 results, stable
at 1.6 billion FF, were achieved thanks to sustained growth in
network activity and tighter control of risks and overhead
costs. This will be the basis of any development for 1995 and
The group's balance sheet total comes to 466 billion FF
(+12%). Net equity rose 10.7% to 38.2 billion FF, including
35.1 billion FF in core capital. This gives Cridit Mutuel a
solvency ratio of 15.8%, the highest of all the major banks.

A year of yet more innovation

1994 saw an expansion of the range of joint products and
services offered by the Federations. Modulimmo, a
variable-repayment property loan, was introduced in January
1994. It was followed in June by Modultravaux, a loan based on
the same principle of variable repayments to finance major
home repair and maintenance work. In terms of managed
investments, Credit Mutuel was the first bank in 1994 to offer
a revamped range of time deposit accounts to comply with the
new tax laws.

The facts behind dynamic growth

Strong performances in accounting deposits and insurance

The movement towards reintermediation, centred on
precautionary investments and controlled-rate products,
gathered strength while the trend in the markets was set
against collective investment.
Total deposits taken by the group increased 7.6% to 454
billion FF. The increase is explained firstly by the sharp
growth in accounting deposits - +12.6%, 4 points higher than
in 1993 - to 308 billion FF, and secondly by the performances
of life assurance and retirement products where volumes, up
25.8% to 64 billion FF, for the first time outstripped UCITS
The structure of new investment is completely different: at a
high level of 34 billion FF, it reflects growth of 60% in
deposits taken from customers.
Individual customers continued to favour contract-based
investment: 10 billion FF in home-loan investment deposits
taken and an outstanding volume of 69 billion FF, giving
Credit Mutuel a market share of 8.7%. Close on 6 billion FF
went into PEP personal investment plans, still one of the
fastest-growing products.
The reversal first perceived in 1993 in the trend towards
deposit accounts also gathered strength but, given the changes
in investment yields and tax treatment, individuals also
shifted some of their cash to time deposit accounts: volumes
were up 26% at 28 billion FF and close on 6 billion FF were
taken by Credit Mutuel's successful new range of time deposit
High levels of subscription (11 billion FF) to life assurance
and retirement products kept the drop in financial investments
to just 1.6% at 146 billion FF. The sharp swing away from
collective investments led to a fall in bank financial
investments (-15.7%) to 82 billion FF.
On cash UCITS alone, the drop in investments was over 13
billion FF, while the falling bond and stock markets adversely
affected long-term UCITS investments.

Demand for financing holding up

While lending by the banking system fell by some 2%, Credit
Mutuel saw a certain recovery. Loans outstanding rose by 4.7%
to 212.5 bn FF, twice the figure for the previous year and one
of the best growth rates in the business. Production of new
loans rose for all forms of financing, reaching the high level
of 61 billion FF on an increase of 27.4%, with almost 46
billion FF in lending to individuals.
In the home-loans sector, production grew over 40% to 23
billion FF, making Credit Mutuel the third biggest bank in the
field with 10 % of the market: total loans outstanding saw the
highest level of growth (+8.5%) to 96 billion FF, or 45% of
all lending.
In a highly competitive environment, the 5% increase in
consumer credit reflects Credit Mutuel's capacity to react:
the group ranks second both in terms of production (22 billion
FF) and amounts outstanding (31 billion FF).
Credit Mutuel's second biggest market, lending to
professionals and business, enjoyed growth led in particular
by investment loans (+5.1%). At 52 billion FF, these represent
a quarter of all loans outstanding.

Results stable at a satisfactory level

Despite 10% growth in activity, volume effects failed to make
up for the impact of interest rates: the drop in yields on
customer loans and financial investments was sharper than the
reduction in resource costs, causing the interest margin to
shrink by 5.9%.
Banking and non-banking commissions, up by 10.4%, accounted
for 21.9% of net banking income. The increase is due above all
to the insurance activity and performances on card payment
services, as Credit Mutuel is still one of the least expensive
networks in terms of banking commissions. As a result of the
changes, net banking income dropped to 17.2 billion FF.
Increases in overheads - depreciation, employee incentives and
profit-sharing included - were kept down to 2.3%, reflecting a
significant improvement in group productivity. Headcount
remained stable at 22 000 employees. Redeployment of staff
within the network continues. Gross operating income was 4.9
billion FF.

Risk control improved considerably across the entire range of
lending. Net provisions fell 34.8% to 1.4 billion FF, giving a
provisioning rate of 58.3%.
In 1994, Credit Mutuel allocated 16.8 billion FF to financing
social housing, twice as much as the previous year, and a
cumulative total of 33.4 billion FF for the first four years
of application of the Livret bleu (blue passbook) protocol, in
total close on 40% of the amounts outstanding. The negative
impact increases swiftly: 320 million FF, six times more than
in 1991.
Cashflow - income after remuneration of shares and before
equity-related provisions - was unchanged on 1993 and
identical to net book income at 1.6 billion FF.


88-90 rue Cardinet
75017 Paris

Contact person : Laurence MORISSEAU

phone: 33 1 44 01 11 82

fax: 33 1 44 01 12 31 or 12 30