Do the Raiffeisen banks (loan associations) have a secret recipe for success?
Bruno Gehrig, Member of the Governing Board
100-Jahr-Jubiläum der Raiffeisenbank, Bichelsee-Turbenthal, 19.2.1999, 19.02.1999
Switzerland’s first Raiffeisen bank was founded in Bichelsee, canton of Thurgau, a century ago. The purpose of the initiative taken by the local clergyman was to ease the dire financial straits the farming and business community found itself in by letting the people help themselves. The example of Bichelsee was followed by several establishments: today, the Raiffeisen organisation is the number three in the domestic banking industry. This success story is based on several factors. The granting of loan facilities is limited to low-risk commitments to members of the individual banks. The fact that borrowers must be co-owners who are liable to provide additional cover makes the Raiffeisen loan unattractive for high-risk carriers.
The clear focus on security has been remarkably successful, particularly during recent years. On an organisational level, the decisive factor is the combination of decentralised responsibility of the banks with the strong management role of the St Gallen head office. The latter plays a vital role in monitoring business activity and undertaking efforts towards structural adjustments.
The Swiss banking landscape offers the Raiffeisen movement attractive perspectives for the future, provided that it can competently master the challenges posed by a changing environment. It is not new recipes that will be called for but the consistent implementation of tried and tested principles. Limiting itself to core business and respecting the proportions befitting Raiffeisen banks is indispensable.