“David and Goliath” Story as Estonian Credit Unions Take on Big Foreign Banks
Juri Valdov talks with H.Kaljuste, CEO of Kehtna Credit Cooperative, in Rapla County, Estonia.
Madison, WI—On behalf of World Council
Credit Unions (WOCCU), Juri Valdov, CEO of
Northwest Federal Credit Union and immediate
past Chairman of Credit Union National
Association (CUNA), traveled to Tallinn,
Estonia, August 23–25, 2007, to assess credit
union development there. As a movement still
working to reestablish itself after the collapse
of Soviet rule, Valdov found in it a true “David
and Goliath” story.
Valdov speaks Estonian and commented on
how “they treated me like one of their own,” as
he was warmly embraced by the credit union
officials in Estonia, who guided him through
visits to credit unions throughout the
Estonia had a thriving credit cooperative
between the two World Wars, but today the
oldest “modern day” credit union dates back to
just 1991, when the country regained its
independence from the former Soviet Union.
Valdov visits Leie Credit Cooperative in Viljandi County, Estonia.
(l-r): M.Toomsalu, CEO of Leie Credit Cooperative, Kevin Helferty,
Chief Accountant, ILCU, A. Ristkok, Executive Director, Estonian Union
of Credit Cooperatives, Juri Valdov.
Estonia’s 11 credit unions are small, mostly
rural community-based institutions. They account
for less than 1% of the financial market and
serve approximately 2,700 members in total. They
range in size from a 52-member financial
institution to one with 569 members.
When Estonia gained independence from the
Union in 1991, its first endeavor to provide
renewed access to financial services in-country
stimulated the start-up of 50 commercial banks.
Forty-eight of the banks failed, losing the
savings of those who had entrusted their hard-
earned money in the banks. Although many large
depositors were able to recover part of their
savings, those with smaller accounts lost
Today, there is no national bank—based on
national capital—in Estonia. Andrus Ristkok,
Executive Director of the Estonian Union of
Credit Cooperatives, reported that two large
Scandinavian banks currently hold more than 90%
of their savings in the Estonian banking sector.
The banks pay a return on savings that is less
than the rate of inflation, yet the bank
divisions in Estonia are twice as profitable as
their European counterparts. Ristkok heads the
Estonian Union of Credit Cooperatives,
established in 1999, on a part-time basis and
with no pay.
The banks and government officials in Estonia
portray credit unions as relics of the past with
no place in today’s modern world. Yet, “Estonia
is a ‘wired’ country where everyone has a cell
phone and access to the Internet,” Valdov
reported. Valdov counseled Estonian credit union
staff on the opportunities the hi-tech
environment afforded them in determining the
best mix of products and services for members so
they can better compete in the changing
“This is about consumer choice,” WOCCU
Vice President and Chief Operating Officer,
Brian Branch, explained, “The lack of
competition in Estonia means that consumers lose
the real value of their savings, receive weak
service and pay a high cost for loans. The
credit unions are providing people with
Today’s technology and mobile society offer
small credit unions, the “Davids” of Estonia, an
opportunity to compete with the
multinational “Goliaths” through smart and
creative use of technology. “The next step is up
to the credit unions in Estonia. They are at a
critical stage in their development and need
outside help as they begin their journey toward
future success,” Valdov stated.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 57,000 credit unions in 103 countries serve 208 million people. Learn more about World Council's impact around the world at www.woccu.org.
Contact: Rebecca Carpenter
Organization: World Council of Credit Unions