During a downturn, choose co-operatives, says a new report from the International Labour Organization, a UN agency.

The study, Resilience in a downturn: The power of financial cooperatives, found financial co-operatives outperformed traditional banks during the global financial crisis on almost every rating level.

“Unlike many investor-owned [traditional] banks, they maintained very good credit ratings, increased their assets and customer-base and the minority that suffered losses quickly bounced back and are growing again,” says report author Johnston Birchall.

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The study defines these co-operatives as customer-owned banks, credit unions and building societies. In these organizations, surpluses are put into reserves, which are eventually returned to members through annual dividends or cheaper financial products.

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The report highlighted Canadian co-operative Desjardins, saying, “The Desjardins Group is the jewel in the crown of the worldwide credit union movement. There are three features that make it special; its sheer size in relation to the banking sector in its region, the complexity of its organization structure and its strong cooperative ethos.”

Desjardins is the fifth-largest financial co-op in the world, according to the World Co-operative Monitor.

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In the years leading up to the 2008 crisis, the co-ops studied had higher Tier 1 ratios than the investor-owned banks. They scored 9.2%, compared to 8.4% for traditional banks. In France and the Netherlands, co-operative ratios were more than 50% higher.

Their profits improved in comparison with traditional banks between 2003 and 2010, with average returns of 7.5%, versus 5.7% for investor-owned banks. Co-operative bank assets also grew between 2007 and 2010, as did their number of customers. Birchall also notes most co-ops did not require government bailouts.

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In Canada, 11 million people belong to financial co-ops, and co-op deposits count for 9.5% of the total assets of deposit-taking institutions.

Vancity, a Vancouver-based co-operative, was recently awarded Best Corporate Citizen by Toronto-based media company Corporate Knights.

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