Children of a Dream

Professors Stefano and Vera Zamagni laid out a lavish feast for us on Tuesday. Their summer home is in a small village in the mountains overlooking Bologna. A short distance as the crow flies; the bus required an hour to negotiate the steep switchbacks. Visit my personal blog  to see some photographs of the stunning vistas as well as a group photo of the Zamagnis and our project coordinators Elvi and Giovanni. Giovanni`s demeanour and body language has me convinced that he is related to Roberto Benini.

During the day we visited the Federazione Banchi di Credit Co-operativo Emilia Romagna (BCC in English and B Chi Chi in Italian). The B Chi Chi comprises 22 autonomous banks, some of which are very small. The combined work force is 3,000. Co-operative Banks are more or less the same as Credit Unions. There is one interesting difference – it is not obligatory for a client to be a member of the Bank. However in order to continue to be recognized as a Co-op Bank at least 51% of the clients have to be members.As a result, over the years, some intuitions have lost that status and continue to exist as regular banks. “We are children of a dream”, explained the chairman. When the system was established in the late 1800s, economists were convinced that it would soon be dead, crushed by a combination of debt load and inflated egos. Nothing of that sort happened.

There have been a few mergers over the years but in general the focus has been on remaining small and yet profitable. Seems to have worked. Traditionally non performing loans have been around 2.5%. This rose to 3.4% during the economic crisis. Corresponding numbers for the other FIs in the same market are 5% and 6.1%. They did not deny credit during the crisis and yet defaults have remained low. The trick has been in knowing the member and in this, being small has helped. As the chairman explained, they know not just the clients but their families. In some cases the relationships go back a few generations on either side of the table. "We are financing the reputations of these people. In the areas of personal banking, quantitative analysis is not that important", he continued. "In this business if you want to make a difference you have to work not just with your head and your hands but also with your heart". On Wednesday we had our last site visit. CAMST is a gigantic food cooperative.Started in 1845 by a group of 16 cooks, waiters and bartenders, it supplies food to schools, hospitals, businesses, restaurant chains through distribution centres, catering and banquet services and it runs a chain of restaurants. Here are some of the numbers: 2008 Revenue €936 Million, 10,000 employees including 1,000 cooks. They serve about 100,000 meals a day and were the food suppliers for the winter Olympics in Turin in 2006.

The first four articles of its charter sum up the organization‘s raison d’être: To take care of workers, use its profits wisely, meet the needs of clients and collaborate with other co-operatives which function along side. We were guests at their restaurant. I ate like a pig: an awesome bowl of salad, a chicken breast in some kind of fantastic sauce, a plate of spaghetti and a cappuccino. I skipped the gelato but had a bowl of fruit. If I had to pay for the meal it would have cost me a little less than 10 bucks. So this brings the official study tour to a close. Ariba is here and we are now on holiday until the 11th.

This blog is being written from Venice. I will continue to provide some updates for those interested. Change everything has its limitations. My personal blog will have the same write up but carry a lot more photos. Over the last few days many people have written very positive emails and thank you all for the encouragement and support.