This past spring, eleven of the world’s leading sustainable banks created a new alliance to build a positive alternative to a global financial system in crisis (full press release below). These banks have assets of over $10B and serve over 7 million customers in 20 countries. (See list below) Many have been around for decades. None, to my knowledge, is too big to fail, perversely benefits from systemic risk it helped to create, or makes headlines from the tens of billions of taxpayer dollars being poured into the balance sheets of their enormous mainstream competitors. Yet, as Peter Blom said, (Peter is CEO of Triodos Bank, founding member of the Global Alliance for Banking on Values) ‘these banks are profitable, growing and crisis resistant.’
Peter continued: ‘When it was unfashionable (Ed note: read — less profitable) to do so they stuck to simple, core banking services that balance people, planet and profit.’
Meet Jean Pogge, SVP at ShoreBank, an Alliance co-founder. Jean said something similar to me last Fall at a Social Venture Network conference. I asked Jean why ShoreBank was doing relatively well given their mission-driven heavy emphasis on the same subprime lending that apparently had triggered the unfolding financial meltdown. (Ed: ShoreBank is the oldest and largest community development bank in the US. This means they lend to low income people buying homes and to businesses creating jobs in low income communities all day long.) Jean said simply that ShoreBank knew their customers. Hmmm.
In talking recently with a friend involved at high levels of the Treasury Department’s TARP program (these are the folks in charge of investing our $750B bailout fund), he said that an underlying issue of the financial meltdown (did he say ‘the’ underlying issue?) was ‘proximity to risk’. He and Jean were saying the same thing. ShoreBank knows its customers; they are in the communities in which they lend; they know the actual human beings and business owners to whom they make loans. Hence, they are close to and able to assess the underlying risk of their loan portfolio and pipeline.
Think George Bailey and the Bailey Savings & Loan in ‘It’s a Wonderful Life’ Video . Mr. Martinelli’s local business is known to George and vice versa. The relationship between banker and banked prevents a run on the bank (one of the things the good folks at TARP (and George) were appropriately afraid of). An economy based on relationships, rather than transactions better weather’s life’s inevitable storms.
In describing the layers upon layers of securitization, syndication, packaging, slicing and dicing, and repackaging of loans which created the large distance between financial product and actual loan recipient which led to the financial crisis, my Treasury friend said ‘we have no interest in anything real anymore’. That’s a big statement (indictment?) of a financial system gone awry. It is a system based on short term opaque transactions, rather than long term transparent relationships. It is a system based on imbalanced decision making which gives dominant consideration to a single interest (i.e. the shareholders) over a balanced consideration of multiple interests (i.e. the ‘people, planet, and profit’) which Peter from Triodos stated were among the values which inform, and sometimes unfashionably constrain, the delivery of core banking services like loans.
It is no surprise that 9 of the 11 founding members of the Global Alliance for Banking on Values are non-US. We only like our George Baileys on Thanksgiving. It is also not surprising that one of them, ShoreBank, is the first US bank to become a Certified B Corporation.
There are other banks in the US which we don’t hear enough about in the news – which is always focused on who’s getting which billions in bailout money. We’ll meet some of them soon.
The Global Alliance for Banking on Values launched
4 March 2009 – Eleven of the world’s leading sustainable banks have created a new alliance to build a positive alternative to a global financial system in crisis. The banks, which have assets of over $10 billion and serve over seven million customers in 20 countries, came together for the first time at a special meeting in the Netherlands from 2 – 4 March.
The Global Alliance for Banking on Values was launched at an event which included speeches from Her Royal Highness Princess Máxima of The Netherlands, a former banker and former member of the United Nations Group on Inclusive Financial Sectors, and Achim Steiner, Executive Director of the United Nations Environment Programme. The banks in the Alliance range from BRAC Bank – part of the BRAC Group, the world’s largest microfinance institution – to ShoreBank, a community bank based in Chicago, and Triodos Bank, Europe’s leading sustainable bank.
Speaking at the launch, Peter Blom, CEO of Triodos Bank, said, “Unlike their enormous mainstream contemporaries, these banks are profitable, growing and crisis resistant. When it was unfashionable to do so they stuck to simple, core banking services that balance people, planet and profit. There’s no one single answer to the global financial crisis. There are many. But the leaders of these organizations, acting on an international stage, hold many of them. Together they are an extraordinary force for change”.
The new partnership plans to develop new ways of working, build organizations better suited to long-term sustainable thinking, and new forms of ownership and economic cooperation. And, given the financial crisis, and its profound and lasting influence, the new Alliance believes its timing is crucial.
According to Fazle Hasan Abed, Founder and Chairperson of BRAC, “We are increasingly dependent on each other economically, wherever we live in the world. If we are to tackle the global problems we face, we are going to need international action to do it. We believe these banks have the potential to change the architecture of the financial world, and start delivering lasting solutions for unserved and underserved communities and sectors.”
Founded by BRAC Bank in Bangladesh, ShoreBank in the United States, and Triodos Bank in The Netherlands, the Alliance’s members are senior bankers, seven of whom are founders of the institutions themselves.
“We will promote responsible finance – supporting existing banks and helping to develop new ones,” says Mary Houghton, President of the ShoreBank Corporation. “We will lead the debate on the banking models we think could inspire profound changes in the mainstream financial industry. We won’t just talk about change, we will work together to deliver it. Given the need for a healthier, more sustainable economy – and the current failure of the mainstream to provide it – establishing the Global Alliance for Banking on Values could hardly be more important.”
Editor’s Notes:
Please contact james.niven@triodos.co.uk for international press enquiries.
The Global Alliance for Baking on Values consists of the following members:
Alternative Bank ABS, Switzerland, www.abs.ch
Banca Popolare Etica, Italy, www.bancaetica.com
Banex, Banco del Exito, Nicaragua, www.banex.com.ni
BRAC Bank and BRAC Microfinance Programme, Bangladesh, www.brac.net and www.bracbank.com
GLS Bank, Germany, www.gls.de
Merkur Bank, Denmark, www.merkurbank.dk
Mibanco, Banco de la Microempresa, Peru, www.mibanco.com.pe
New Resource Bank, United States, www.newresourcebank.com
ShoreBank Corporation, United States, www.shorebankcorp.com
Triodos Bank, The Netherlands, www.triodos.com
XacBank, Mongolia, www.xacbank.com
To qualify for membership, each institution has to meet three criteria:
- They are independent and licensed banks with a focus on retail customers;
- with a minimum balance sheet of $100 million
- and, most significantly, they should be committed to responsible financing and the triple bottom line of people, planet and profit.
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