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Estonia and Virginia form central banking system company
LYNCHBURG, Va. (6/24/10)--The Virginia Credit Union League and the Estonian Union of Credit Cooperatives took historic steps Wednesday toward ensuring the long-term viability of credit cooperatives (credit unions) in the Baltic nation.
Click to view larger image Partners in the new Baltic Services Co. pose after signing an agreement forming a new corporation to establish a clearing system so credit unions in Estonia and possibly elsewhere have access to Eastern Europe's central banking system. Partners include Juri Valdov, far left, retired CEO of Northwest FCU; Andrus Ristkok, second from left, executive director of the Estonian Union of Credit Cooperatives; Erki Pisuke, second from right, Tartu University (Estonia) credit union board member; and Rick Pillow, far right, Virginia Credit Union League president. (Photo provided by the Virginia Credit Union League)
The two associations are working together to restore and build the non-profit cooperative financial system in Estonia. In their most significant step toward that goal, they joined with information technology company Mindware, three Estonian credit cooperatives, and two individuals to form the Baltic Services Co.(See related News Now story, "Va. league, Baltic CU Systems sign agreement.") The company's mission will be to establish a clearing system to provide credit cooperatives in Estonia, and possibly elsewhere, with access to the central banking system in Eastern Europe. With such access, credit cooperatives will be better positioned to offer checking, ATM and card services, and eventually expand into online banking, the league said. Juri Valdov, retired CEO of Herndon, Va.-based Northwest FCU was elected chairman of the new corporation. Andrus Ristkok, who currently heads the Estonian Union of Credit Cooperatives, was named CEO. Valdov praised the group for its vision, saying the new company will provide services essential to the growth and future viability of Estonia’s credit cooperatives. Ristkok arranged a Baltic summit held Tuesday, where leaders of credit cooperatives in Latvia and Lithuania met to discuss joining the Baltic Services Co. Estonia's small but growing credit cooperative system presented the technology plan, which led to the formation of the Baltic Services Co., during a visit to Virginia last year. Representatives of Estonian credit cooperatives noted that access to Eastern Europe's central banking system was essential if they were to compete against the Scandinavian banks that currently dominate the Estonian market. Members of the Virginia league's Partnership Committee are visiting Estonia this week for a series of meetings about the company; partnership initiatives between credit cooperatives in Estonia, Latvia and Lithuania; and on-site visits to four Estonian credit cooperatives. The league and the Estonian Union of Credit Cooperatives have been partners since 2008 through the World Council of Credit Unions' International Partnerships Program, which brings together credit union movements from around the world to exchange ideas and technical expertise with the goal of building stronger institutions to benefit their members. The first financial cooperatives were founded in Estonia in 1902, pre-dating the American movement. At its height in 1939, the Estonian movement boasted 184 financial cooperatives and had a 52% market share. After the Soviets occupied the nation in 1940, credit unions were abolished. During Perestroika, credit unions were again legalized, and the first new Estonian credit union was formed in 1990. At present, the nation boasts 18 credit cooperatives, which hold $16 million (U.S. dollars) in shares.
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