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Virginia League, Estonian Cooperatives Sign Partnership Agreement

LYNCHBURG, Va.-The Virginia Credit Union League (VCUL) has signed a partnership agreement with the Estonian Union of Credit Cooperatives (EUCC) to provide support and expertise to the Baltic country's growing cooperative movement. The partnership agreement, signed April 11 during a ceremony at VCUL's annual meeting, brings to 28 the total number of World Council of Credit Unions' (WOCCU's) international partnerships between U.S. credit union leagues or Canadian credit union centrals with credit union movements in developing countries.

"Many of our credit unions expressed strong interest in establishing such a partnership, and we're excited about the opportunity to support credit union development in another part of the world," said Rick Pillow, president of VCUL. "This partnership truly is a historic undertaking for the league and our credit unions. Our hope is that we can have a lasting impact on the Estonian movement by helping its cooperatives better prepare for both the challenges and opportunities before them."

WOCCU's partnerships solidify when each organization, accompanied by WOCCU, visits its partner to observe operations and determine common areas of possible assistance. The parties formalize their relationship by signing a partnership agreement and developing an annual work plan. Partnership benefits are generally mutual for both parties.

According to Victor Miguel Corro, WOCCU's International Partnerships manager, the Estonian credit union movement is very small at present and faced with a marketplace dominated by Scandinavian banks. EUCC-Estonia's version of a credit union league-consists of 11 credit unions with a combined 2,693 members. The institutions have almost 0% delinquency because many operate more like savings clubs than full-service lenders and, in some cases, make only 100% share-secured loans. They account for less than 1% of the country's financial services market but strongly desire to play a more significant role.

"There are a number of issues facing the Estonian cooperatives, but membership growth and technology are primary concerns," said Corro. "I think they desperately need an awareness campaign to communicate the message that they are a legitimate alternative to the for-profit institutions that dominate the market, but there is also a need to modernize and better leverage technology in serving members."

Corro also noted a host of other issues that generally confront credit unions in other nations, including the need for advocacy/governmental affairs, strategic planning, disaster recovery and marketing.

In August, a delegation from Virginia's credit unions will visit Estonia for a firsthand look at the operations of the Estonian cooperatives.

"These visits serve both as a knowledge-transfer and a fact-finding tour," Corro said. "Until you are ‘on the ground,' it's difficult to appreciate the cultural differences or evaluate the regulatory environment and technology issues. It can be an eye-opening experience for the U.S. contingent once they are overseas. But it also serves to reaffirm credit unions' role as agents of social change. We see firsthand the credit unions' ability to create wealth and provide jobs, and in many cases, it is our chance to re-learn our ‘people helping people' philosophy."

Virginia's credit unions already have some experience with the Estonian movement, thanks to Juri Valdov, former president and now senior vice president of external affairs for Northwest Federal Credit Union in Herndon, Va. Valdov visited Estonia in August 2007 to assess the nation's credit union system.

The Estonian credit union movement has tremendous growth opportunities, according to Valdov. The nation's free-market economy is being rapidly rebuilt, and widespread support to reintegrate into Western Europe has enabled the government to implement ambitious programs of privatization and economic reform. Consumption per capita is high and continues to grow, and while the nation struggles with high unemployment, the vast majority of its citizens enjoy increasing economic opportunities and higher standards of living.

"Financial cooperatives are not new to Estonia," Valdov said. "They existed years before the Soviet occupation and are now attempting a comeback. I view our effort as more of an attempt to revitalize credit cooperatives in a nation that has a proud cooperative history."

View full press release.


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