The ethical cooperative bank NewB has not yet completed the EUR 40 million needed to maintain its banking license. The National Bank still has until the end of September to finalize that amount.
NewB was founded in 2011 – in the wake of the financial crisis – as a sustainable alternative to everything that had gone wrong during the financial crisis. Initially, the bank had a lot of support from people and organizations who wanted to become cooperatives, but the commercial roll-out remained difficult. It took years before it could acquire a banking license. The bank was loss-making this year and last, so in May the National Bank of Belgium demanded that the capital be supplemented with 40 million euros of new money. Until October, NewB had time to find the money. The ethical bank only sought the money from institutional investors.
Apparently that search is not going well. Less than two weeks before the deadline, the 40 million euros has not yet been finalized, CEO Thierry Smets reports. He declined to say how much money is yet to be found. NewB made a ‘warm appeal to the population to support the bank’ via a press release today. ‘We do this to convince investors that the bank still enjoys a lot of support. Potential investors complain that our conversion ratio is too low: too few cooperators are customers of the bank.’ The bank has 117,000 citizen cooperatives and 351 organizations that support the bank. In contrast, it has only 20,000 customers, good for 180 million euros in savings and 50 million euros in investment capital, have entrusted the bank. In comparison: Triodos Belgium, the other ethical bank in Belgium, has more than 2 billion euros in savings.
What if the 40 million euros demanded by the National Bank is not found by October? Smets does not want to go too far ahead. ‘There are several possible scenarios. At worst, we lose our banking license. That doesn’t have to be the end of NewB though. Scenarios are also possible in which we can continue to operate without a licence.’ NewB also sold insurance and investment products that do not require a license before it had a banking license.
• Major shareholders warn ethical bank NewB