The Guide to Sustainable Banking 2013

7/27/2019 The Guide to Sustainable Banking 2013

1/52

Sustainable Banking

www.blueandgreentomorrow.com

YOU CAN PRINT MONEY

TO BAIL OUT A BANK BUT

YOU CANT PRINT LIFE TO

BAIL OUT A PLANET

ENTREPRENEUR AND

AUTHOR PAUL HAWKEN

The Guide to

OCTOBER

2013


2/522 OCTOBER2013 | BLUE & GREEN COMMUNICATIONS 2013

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03 FOREWORDBy Laura Willoughby, Move Your Money

06 BRITAINS BIG BAD BANKS

8 WHATS GONE WRONG WITH FINANCE?By Paul Ellis, Ecology Building Society

10 SHOCKING AND WIDESPREAD MALPRACTICE: WHAT THE BANKINGCOMMISSION SAYS ABOUT OUR BIG BANKS

By Ilaria Bertini

14 OUR BANKS ARE DISCONNECTED FROM THE REAL ECONOMYBy Ryan Brightwell, Bright Analysis

16 WILL BARCLAYS BECOME THE WORLDS FIRST ETHICAL BANKINGSUPERPOWER?

By Alex Blackburne

18 THE CO-OPERATIVE BANK AND ETHICSBy Nicky Stubbs

20 SWITCHING YOUR CURRENT ACCOUNT JUST GOT EASIERBy Tom Revell

22 THERE ARE ALTERNATIVES

24 TRIODOS BANK

28 CHARITY BANK

31 UNITY TRUST BANK

34 ECOLOGY BUILDING SOCIETY

36 HANDELSBANKEN

38 - CREDIT UNIONS: A GROWING MOVEMENTBy Tom Revell

40 BANKING SCORECARD

42 - ALTERNATIVE BANKS NEED TO STEP UP TO THE MARKBy Alex Blackburne

45 WHAT DO I DO NEXT?

CONTENTS

PUBLISHER

Simon Leadbetter

EDITOR

Alex Blackburne

WRITERS

Ilaria Bertini, Nicky Stubbs,Tom Revell, Charlotte Malone

HEAD OF MARKETING

Seth Kirby

DESIGNER

Dorina Cioria

www.blueandgreentomorrow.comwww.blueandgreeninvestor.com

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[email protected]

TWITTER

@bluegreentweet@bluegreeninvest

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3/52BLUE & GREEN COMMUNICATIONS 2013 |2013 OCTOBER 3

There is nothing like rewriting history. In the

current round of bank inghting, prompted byseven-day current account switching, Lloyds

would have you think there is nothing moreimportant to its business than you, NatWest would say it

is not a bank but a best friend, and TSB claims it has beenacting with your communitys interest at heart for over 200

years continuously.

Current accounts are only part of the bigger personal nancepicture. They are only offered by around 35 providers in theUK, and many people think that switching is complicatedand difcult. Savings and investments on the other hand areeasier to move.But here is the irony. How customers feel about their currentaccount arrangements has a direct inuence on how manypeople treat their savings and investments. I met an MEPrecently, who for 30 years has been a candidate in some

tough and bloody election campaigns.Pushed by her bank into changing her accounts, she told meshe wanted to move from them. Great, I thought untilshe continued to say that the problem was that she wantedeverything in one place. So it was easier. She had managed tomake the idea of a switch even harder in her mind by adding

in her savings and ISA. Her natural instinct was not to moveany of it.

Dont fall into that trap. Shop around for a better deal andnd a banking provider who not only gives you a goodreturn, but shares your values.

The Move Your Money Switching Scorecard judges bankson their honesty, customer service and ethics, and Blue &Green Tomorrows guide lays out a number of sustainable,responsible and ethical alternatives.Whatever you want from your bank, make sure you get it.When we match up what we think about issues with ouractions as consumers, we can make a positive impact on the

world around us.

And spread the message of change. Dont just use thisguide or our online scorecard as a tool for you to move yourmoney, but tell your friends and colleagues what youredoing. Its time we stopped putting up with banks telling us

theyve changed in their glossy adverts, when all of us knownothings changed at all.Until we start nailing the myths about how to bank andinvest by sharing our own experiences, we wont changeanything. So read this guide, check out the Move YourMoney website, and lets talk about money.

CHIEF EXECUTIVE, MOVE YOUR MONEY

oreword

www.moveyourmoney.org.uk

Who do you bank with?

Note: this chart is a self-selecting sample of Blue&Green Tomorrows readship and therefore may not be representative.

30%

25%

20%

15%

10%

5%

0%

HBOS

Natw

est

Barclays

Natio

nswide

First

Direct

Santan

der

LloydsT

SBHS

BCOther

Co-ope

rativ

eBank

2012

2013



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Apply for an account at the worlds leading sustainable bank.

Every small act can set something big in motion. What you eat. How you commute. What you do in

your community. Start making a positive change. Apply for an account at Triodos Bank, and make

your savings work harder. Financially, socially, culturally and environmentally. Go to triodos.co.uk.

THE BEST

WAY TOMAKE A BIGDIFFERENCEACT SMALL

Triodos Bank NV (incorporated under the laws of the Netherlands with limitedliability, registered in England and Wales BR3012). Authorised by the DutchCentral Bank and subject to limited regulation by the Financial Conduct Authorityand Prudential Regulation Authority. Details about the extent of our regulation bythe Financial Conduct Authority and Prudential Regulation Authority are availablefrom us on request. Registered oce: Triodos Bank, Deanery Road, Bristol BS1 5AS.



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BRITAINS BIGBAD BANKSA GLANCE AT SOME OF THE SCANDALS AND MISDEMEANOURSOF THE BIG FOUR UK BANKING GROUPS: BARCLAYS, HSBC,LLOYDS AND THE ROYAL BANK OF SCOTLAND.

LLOYDSFebruary 2013: Find 4.3m for delaying PPI compensationMarch 2013: Reveals a 570m loss for 2012, but still handschief executive Antnio Horta-Osrio a bonus of over 1.4mJune 2013: Pays out 4.3 billion in total over a number ofmonths to 1.3 million customers who were victims of thePPI mis-sellingJune 2013: Admits issues with the way some of its employ-ees were handling complaints over PPI

BARCLAYSNovember 2011: Named fth biggest climate killer by NGOsUrgewald and BankTrack, after having invested 9.7 billion infossil fuels since 2005January 2012: Recognised at Public Eye Awards 2012 for foodspeculation practices and general social and ecological offencesFebruary 2012: Forced to pay back 500m in tax which it hadtried to avoid

April 2012: A signicant 26.9% of shareholders vote no to thebanks executive pay package at its AGMJune 2012: Fined 290 for rigging Libor the rate at whichbanks lend to each other. Chief executive Bob Diamond andchairman Marcus Agius step downJuly 2013: US energy regulator the Federal Energy RegulatoryCommission (FERC) orders bank to pay 299m ne for attempt-ing to manipulate electricity market in the USSeptember 2013: Fined 50m from the FCA over a deal

with Qatari investors in 2008 which the bank conrmed itwould contest



HSBCNovember 2011: Named 20thbiggest climate killer by NGOsUrgewald and BankTrack, after

having invested 3.8 billion in fossilfuels since 2005December 2012: Forced to pay

1.2 billion in nes for channellingmoney for Mexican drug baronsand Iranian criminals the largestne ever given to a bankMarch 2013: Reveals it shelled out$1.9 billion in 2012 for mis-sellingnancial products in the UKMarch 2013: Chief executiveStuart Gulliver awarded 1.95m

bonus, despite interest rate swap,PPI and money laundering scandalsin 2012

RBSNovember 2011: Named seventh biggest climate killerby NGOs Urgewald and BankTrack, after having invested

9.3 billion in fossil fuels since 2005May 2012: Friends of the Earth Scotland reveals bank

shelled out nearly 40 billion to oil and gas companies inprevious six monthsMay 2012: Campaigners reveal that the bank had under-

written bonds worth 81.9m for a Canadian tar sands rmin the previous yearNovember 2012: Puts aside 400mto cover its paymentprotection insurance mis-selling casesFebruary 2013: Told to pay over 390m in nes to threeregulators for its role in xing LiborFebruary 2013: Reveals a 5.17 billion pre-tax loss forprevious year, yet still shells out 607m in bonuses to itsemployeesJuly 2013: Fined 5.6m by the FCA after incorrectlyreporting more than 44m transactions made with otherbanks and non-retail nancial services rms

Source: Financial Conduct Authority, April 2013

1

2

3

4

5

6

7

8

9

10

Barclays

Lloyds TSB (Lloyds

Banking Group)

Bank o Scotland

(Lloyds Banking

Group)

MBNA

Santander UK

National Westminster

Bank

HSBC

Capital One

The Royal Bank o

Scotland

Nationwide Building

Society

414,302

349,386

338,912

270,486

237,923

211,639

183,721

146,748

143,148

70,058

The 10 mostcomplained about

banks(July-Dec 2012)

Rank BankNumber ofcomplaints



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WHATS GONEWRONG WITH

FINANCE?BY PAUL ELLIS, ECOLOGY BUILDING SOCIETYH

ow do you begin explainingwhats wrong with nance? Istarted with a list. The list gotlonger. And longer. I didnt

get much further back than the last fewmonths before Id had enough.First the Libor scandal, which has so

far involved Barclays, the Royal Bank ofScotland and UBS. You could say its just abit of gaming in the system, but the realityis that an awful lot of consumer productsare set with reference to Libor. And itmay well be that in that gaming, there arepeople who have been put into high levelsof debt because products havent operatedin the way they thought.

Barclays name comes up again in relationto tax avoidance, something thats gettinga lot of attention at the moment.

But what does tax avoidance really mean?A friend of mine died last year; havinghad a heart operation which went wrong,and affected his intestines, he needed helpat home. Before he died, he was asked toshufe down the road to a lamppost andback, to test out whether he needed anyhelp. Because he actually managed thatfeat, his benets were removed. He died afew months later.Cuts to public services arent solely theresult of tax avoidance, but the fact is thatkey stakeholders in our society arent pay-ing their share. You can argue as to whatthat share should be. But the reality is if

you want to run a democracy, everybodyhas to pay.

IN ONEBRANCH OF HSBCIN MEXICO, THEY

HAD INCREASED THESIZES OF THE TELLERWINDOWS IN ORDER

TO GET THE DRUGLORDS BOXES OF

CASH THROUGH



Then we move on to the spectacularexample of HSBC, which until this storybroke, had been seen perhaps as one ofthe better guys.

But it turns out that nobody in the bankhad the slightest idea that money launder-ing was going on, and on a vast scale.One story reported that in one branch ofHSBC in Mexico, they had increased thesizes of the teller windows in order to get

the drug lords boxes of cash through.It seems that the whole organisation wasunaware of this, which I think is a prob-lem in itself. But what does that mean?It translates into other forms of crimesuch as prostitution, and it translates intopeoples lives being wasted by drugs.

Again, people are directly affected by this.

This is not some technical infringementby some law. There are direct impacts onsociety, and on a very large scale.

And then nally, Barclays decided itwould stop speculating on food com-modities back on February 12 this year. Ithappened to be just before products that

were based on food commodity specula-tion were named in the European parlia-ment as being some of the most damagingnancial products around.This kind of speculation ups the price of

food. That means increased poverty andindeed starvation. Once again, this isnot just some technical exercise withinnancial markets.These actions are not victimless.How is it that we came to accept thatthese things could happen? Thats whatamazes me. The idea that greed is good,operating within a mindset that sayseverything can be handled by the marketsand any activity can eventually aggregate

to a good outcome, allows people to oper-ate with impunity.Its prot at any cost: trying to satisfy thegreed of others based on a short-termhorizon. Were then pushed down a riskcurve that says, Anything goes, if we canget the return quickly.This ideology is subsequently built intothe system: enormous payments to returnprots back to the bank or the businessunit within the bank, and incentives

within the regulatory structure to hide

risk so banks can make even more money.In a sense, the UK economy became

utterly dependent on the performanceof the nance sector. As a society, we

were willing to let these people operate,because we feared the consequences of

what would happen to GDP if we didnt

get this boost to our economy.Some of the consequences of this arereected in our nancial infrastructure.Weve ended up with the problem ofconcentration, where banks are too bigto fail. The impacts are too huge if weallowed one of these banks to go under.

But theyre also too big to manage, andthus you get scenarios like at HSBC,

where the directors said they had no

real idea money laundering was goingon in Mexico.Weve seen banks moving into areas thatthey dont really understand, widening

activity in order to get prot, and endingup with blurred divisions between retailand investment banking.But its not just the banks themselvesthat are the problem. The regulatorystructure, I believe, is badly designed.It really only works for large banks, andit struggles to accommodate the needto create competition and allow newentrants, especially new mutuals. Theshareholder control model in plcs reallydoes not work anymore.

But we are all complicit in this to somedegree. We all want big pensions. We allwant high returns on our savings prod-ucts. We all want free banking, whichisnt really free. Because it hides the real

price, this acts as a barrier to new entrantsin the current account market.We didnt inform ourselves as to how thenance system works. We were happyto be able to get the loans and the high

interest rates on our savings accounts,without asking how they could possiblypay these rates. The basic fundamentalsof the system were wrong and, inevitably,the whole thing collapsed.Weve been too willing to act as consum-ers, rather than as citizens. Weve been

willing to let the banks do the work for

us, and now its time to question and be

more engaged. Thats where the democra-tisation of nance really begins.

THE BANKS ACTIONS ARE NOT VICTIMLESS

Paul Ellis is chieexecutive o EcologyBuilding Society.

www.ecology.co.uk



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financial sector has been gravely dam-aged. Trust in banking has fallen to anew low.He added, It is not just bankers thatneed to change. The actions of regula-tors and governments have contributedto the decline in standards.One measure suggested relates to thepossibility of directly affecting bankers

earnings, with an appointed authorityable to cancel all outstanding deferred

remuneration of senior bank employeesif the bank fails and therefore needs

taxpayers support.The commission suggested the creationof a Senior Persons Regime, to makesure that the most crucial responsibili-ties are on senior individuals, com -pletely accountable for the decisionsrelated to the bank. Finally, a newremuneration code would ensure a bal-

ance between risks taken and rewardsreceived in remuneration, with muchmore remuneration set to be receivedover a longer time lapse.

SHOCKING AND WIDESPREADMALPRACTICE: WHAT THE

BANKING COMMISSION SAYSABOUT OUR BIG BANKS

BY ILARIA BERTINI

IN JUNE, THE PARLIAMENTARY COMMISSION ON BANKING STANDARDS ISSUED ITS FINALAMENDMENTS TO THE BANKING REFORM BILL TO ADDRESS WHAT IT CALLED SHOCKING ANDWIDESPREAD MALPRACTICE WITHIN THE BANKING SECTOR, AND FINALLY SPELL AN END TOIRRESPONSIBLE ACTIVITY.

The commission was as-sembled following theLibor scandal in 2012, andcharged with reviewing pro-

fessional standards and culture in the

UK banking sector. It aims to reformbehaviour that it defined as unsustain-

able and deteriorating, for the good oftaxpayers, customers, employees and

shareholders.The reports published by the com-mission, called Changing banking forgood, outlined a series of measuresaimed at tackling irresponsible and un-ethical banking, such as placing greaterresponsibility on senior staff and anew remuneration codes. The formermeans that in the most serious cases ofmalpractice, those responsible mightend up being criminally prosecuted andsent to jail for reckless misconduct.

When initially announcing the meas-ures, the chair of the committeeAndrew Tyrie said, Taxpayers andcustomers have lost out. The economyhas suffered. The reputation of the



being able to take measures before abank fails? Regulators should be in-vest igat ing th ings like unsustainable

lending and high-carbon investments things that are likely to be limits inthe future.However, Laura Willoughby from theMove your Money campaign welcomedthe report and the measures proposed.She said, Bankers must be responsiblefor their actions, customers need morechoice and freedom to switch whenunhappy and the economy needs trust-

worthy regulators.Meanwhile Paul Ellis, chief execu-tive of Ecology Building Society, saidthe commissions report representeda crucial milestone as recklessnessand impunity will no longer be thestatus quo.

All parties agree that a problem exists something clearly outlined by thecommission. In one report, it said,Many bank staff have been paid toomuch for doing the wrong things

but the penalties for failure, oftenmanifest only later, have been muchsmaller or negligible, while topbankers dodged accountability forfailings on their watch by claiming

ignorance or hiding behind collective

decision-making.There might be different formulas toaddress these problems, but one thingis clear. Banks need to change their at-titude, putting society and the commongood at the core of their businesses and

regaining the trust of their customers.For now they know they will be vili-

fied by everyone for behaviour of any

other kind.

The commissions proposals particu-larly the possibility of bankers goingto jail have been met with mixedreactions. The Law Society argued thatsending those responsible to prison

would not be an effective solution to

solve banking malpractice.Introducing recklessness as the basisfor an offence means that prosecutors

wil l have to decide, possibly years aftera business decision was taken, whetherit was reckless or not at the time, saidits chief executive Desmond Hudson.

Business decisions will always involvea degree of risk; the commercial envi -ronment is unpredictable and, whilea decision may be characterised asreckless with the benefit of hindsight,at the time it is taken it may be a per-fectly reasonable course of action.Similarly, head of market and corporatedevelopment at values-based TriodosBank James Vaccaro wrote on Blue &Green Tomorrow, The commissionsaid it wasnt just one or two bad ap-

ples, although it didnt quite get intothe entire mechanics of the disease inthe orchard.

It talks about punishing bankersfor banks that fail but what about

Ilaria Bertini is ajournalist at Blue &

Green Tomorrow.

To view the ullparliamentary

commission on bankingstandards report, see

here: bit.ly/12TVqYY



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OUR BANKS AREDISCONNECTED FROMTHE REAL ECONOMYBY RYAN BRIGHTWELL

JUST 42% OF THE TOTAL ASSETSHELD BY BRITISH BANKS IS ACTUALLYLOANED TO CUSTOMERS

Most commentators seem toagree that a return to back

to basics banking is neededif we are to avoid the kind

of speculative bubbles that tanked theglobal economy in 2008.This means banks should focus ontaking deposits and offering loans, andmaking a fair margin on the differencein interest rates between the two.

(Once, bankers were said to adhere tosomething called the 3-6-3 rule: pay

3% interest on deposits, loan at 6%,and be on the golf course by 3pm. Thiswas characteristic of a lazy, uncompeti-tive banking market, but one which, atleast, didnt crash the world economy.)How close are we to achieving thisback to basics banking model in theUK? Greg Van Elsen of the Belgian NGOFairFin last year published a report, ABank in Reverse, which investigatedthis question in a Belgian context. Thereport looked into the nancial state-ments of banks active in Belgium, and

sought to identify the countrys mostrespectable bank, that which was mostdedicated to funding the real economyand least concerned with short-termtrading for prot.We are convinced, wrote FairFin,that most banks should become some-

what better behaved, and be mostly atthe service of the real economy. So infact, a bank in reverse. So lets look atthe equivalent data for the main banksin the UK.

One of the important ratios the reportlooked at was the proportion of a banksassets which is accounted for by loans

and advances to customers, includinglending to businesses and individuals

(but not to other banks). This is, afterall, what we expect banks to be doing

with our money.Looking at this data for the UKs mainbanking groups shows that overall,banks are only using a minority of theirassets to provide loans to their custom-ers. In fact, just 42% of the total assetsheld by British banks is actually loanedto customers. While some of the restis held as cash and in central banks, amuch larger amount is held in deriva-

tives and other short-term assets heldfor trade.Barclays stands out as the only bank

with less than one-third of its assets

being lent to customers. HSBC and RBSalso use a minority of their capital for

what most of us recognise as banking.While none of the British banks fared asbadly as Deutsche Bank, which FairFinfound used only 19% of its assets forlending, this is a poor picture overall.The Co-operative Bank was the onlybank lending out more than two-thirdsof its balance sheet to customers

Table 1: Loans to Customers/Total Assets

Source: Banks 2012 Annual Reports - Loans and advances to customers divided by total assets.

2012 2011 Trend

Darclays

HSBC

RBS

Lloyds

Santander

Co-operative

Average(weighted)

Poor (29%)

Poor (37%)

Poor (38%)

Average (56%)

Average (59%)

Good (67%)

Poor (42%)

Poor (29%)

Poor (37%)

Poor (34%)

Average (58%)

Good (61%)

Good (60%)

Poor (41%)

Flat

Flat

Increasing

Decreasing

Decreasing

Decreasing

Increasing



This is analysis is certainly a simpli-cation of the complex operations oftodays banking giants, and furtherresearch is needed to identify trading

assets which may support the real econ-omy in a positive way. Also, it must benoted that few banks disclose enough

information to identify how much oftheir loans to customers are supportingunsuitable or unjust economic activities.However, the aim of this analysis is toidentify what proportion of a banksattention is focused on the productiveeconomy, and what proportion is beinggambled in pursuit of short-term prots.The data suggests that, for most of thesector, back to basics banking remainsa long way off.

* While this analysis is new, similar data

has been produced by others in previ-ous years. After compiling these gures,

it came to my attention that a similar

exercise was carried out on the basis of

2011 data by the European Green party

for the website bankingsins.eu. This

data is consistent with their gures, but

provides an update for 2012, as well as

some additional analysis on the picture

for the overall market. Their methodol-

ogy for calculating speculative activity

was slightly different, focusing purely

on derivatives.

BACK TOBASICS BANKING

REMAINS A LONGWAY OFF

Ryan Brightwell isthe ounder o BrightAnalysis, a research

consultancy orsustainability and social

change.www.brightanalysis.eu

Table 2: Trading Assets/Total Assets 2012

Trading Assets Total Assets Ratio

RBS

Barclays

HSBC

Santander

Lloyds

Co-operative

666,458m

602,555m

471,682m

145,424m

68,324m

1,159m

1,312,295m

1,490,321m

1,665,335m

1,037,756m

924,552m

49,573m

This is a simple ratio to calculate, but ittells us something about how much of abanks attention is focused on nancingthe real economy.*Calculating the amount of moneybanks set aside for short-term tradingis a more challenging task, and directlycomparable gures are not available for

all banks. (As such, this data should betreated with caution.) Again, followingFairFins methodology, the data belowlooks at the securities portfolio of thebanks to identify securities held for

trading the assets most likely to beheld for short-term prot-making. (Se-curities held to maturity, in contrast,concern assets that a bank intends

to hold to maturity, and thus are notspeculative in nature.)These gures show a clear correlationbetween those banks lending a smallerproportion of their capital to custom-ers and those with investing a greater

proportion in speculative trading. TheRoyal Bank of Scotland (RBS) and Bar-

clays stand out as the two banks dedi-cating more of their assets to short-termtrading than they do to actual loans to

customers. For RBS 82% owned, ofcourse, by the British taxpayer morethan half of its assets are held for trad-

ing. The Co-operative Bank, mean-while, reports investment in derivativesat just 2% of its total assets.

Very poor (51%)

Very poor (40%)

Poor (28%)

Average (14%)

Average (7%)

Good (2%)

Source: Total Assets from 2012 Annual Reports (Consolidate Balance Sheet). Trading Assets: Lloyds, HSBC and RBSsourced from Form 2OF SEC lings- assets hold for trading; Santander sourced from Annual Report Consolidate BalanceSheet - nancial assets held for trading; Barclays sourced from Form 2OF SEC lings- total derivative assets held for

trading purposes. Data for HSBC and Santander has been converted to GBP using Oanda.com exchange change rates thebalance sheet data (31/12/2012). While every effort has been taken to source the most appropriate data for each bank,care should be taken as ata may not be directly comparable.



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executive in August 2012 was AntonyJenkins, who had occupied a numberof high-prole positions at Barclays,Barclaycard and Citigroup in a careerspanning almost three decades. Judgingby his CV, Jenkins was not a man youdexpect to lead an ethical revolution atone of Britains biggest banks.His predecessor Diamond had leftthe firm in explosive circumstances,and appeared before the Treasurycommittee to discuss his formeremployers role in the Libor scandaljust a day after resigning. LabourMP John Mann, who sits on thecommittee, was particularly bullishtowards the former Barclays chief.Youre the man in charge. But youreaccepting all the good things and thebonuses and the people workingfor you are fiddling the system,potentially going to prison, Mannsaid, directly to Diamond.Give me a suggestion of how youre

going to show contrition to those staffand customers who are wondering

whether to take their money out of thisrotten, thieving bank?Diamond surrendered after over

WILL BARCLAYSBECOME THEWORLDS FIRSTETHICAL BANKINGSUPERPOWER?

BY ALEX BLACKBURNE

The Libor rate-rigging scandal,a shareholder revolt over

executive pay, aggressivetax avoidance and an award

for social and ecological offencesmade 2012 an overall unpleasant yearfor Barclays, to say the very least.Its reputation took an arguably biggerhit than any of the other high street

banks in the UK and made a mockeryof its establishing principles honesty,integrity and plain-dealing which

were engraved into its foundation in the

17th century by a group of Quakers.But since it was ned 276m for itsrole in the Libor scandal in June 2012 after which, chief executive BobDiamond and chairman Marcus Agiusboth swiftly resigned the spotlightof unethical behaviour has focused its

attention on other banks.

While HSBC was paying a 1.2 billionmoney laundering ne, the Royal Bankof Scotland was shelling out for Libor

and Lloyds TSB was coping with a439m half -year loss, a shift changeappeared to be happening at BarclaysHQ in Canary Wharf.Replacing Bob Diamond as chief


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THE CO-OPERATIVE

BANK ANDETHICSONCE SEEN AS THE LEADING ETHICALBANKING OPTION, THE CO-OPERATIVE

BANK HAS ENDURED A TOUGH 12 MONTHSAFTER FINANCING PROBLEMS LED TO IT

UNVEILING A 1.5 BILLION RESCUE PLAN. IS ITPOSSIBLE FOR THE BANK TO REMAIN AT THE

FOREFRONT OF ETHICAL BANKING?

BY NICKY STUBBS

It was April 2013 when it emergedthat the Co-operative Bank hadcome into nancial difculties.

A deal to purchase 632 Lloydsbranches which would have increased

its market share from 1% to 7% fellthrough, leading many to question why.The collapse of the deal owes its origins tothe Co-ops 2009 acquisition of Britan-nia Building Society, and along with it,the bad debts accumulated by Britannia.The complexities that are so dening of

the banking system mean that howeverscally disciplined one bank may be, it isnot immune to the problems that existoutside its own walls.

As a result, the Co-operative encountereda 1.5 billion shortfall in its balance sheet.To plug the hole, shares were made avail-able for commercial investors for therst time in its 141-year history.The process of diversifying a co-operativecreates a contradiction in values when

one considers that a mutually-ownedorganisation is, by denition, owned by itsconsumers. This contrasts with a tradi-tional capitalist system. The Co-op haslong prided itself on political and econom-ic independence, but will a shareholder-based system allow for continued strong



ethical values within the organisation?Euan Sutherland, CEO of overarchingCo-op Group, insisted at the time that itsfocus on ethical banking would continue,telling the BBC back in June, There isno change to our ethos or the way we run

our bank.These assertions were also supportedby other professionals, including MartinShaw, chief executive of the Associationof Financial Mutuals, who said that cus-tomers would not notice any difference inthe way things were being run.

Theoretically, the Co-operative Bank doesnot exist as a co-operative in its purestform that is, with direct consumerownership due to a lack of clarity inBritish regulation. Whilst other Europeancountries enjoy a system where the assetsare commonly owned by members, UKbanks exist ofcially as a company in theirown right. This is owned by members,through a system of prot sharing.In an article written around the time

of the Lloyds deal collapse, Ed Mayo,secretary-general of trade body Co-opera-tives UK, set out the basic formulation ofa co-operative.What starts as one form of enterprise can

change, he said.Some co-operatives begin as 100%member owned, and then diversify,offering shares to investor-owners. Thisapplies mainly to farmer co-ops, but also,internationally, to some others needinglarge investments, such as telecoms andinsurance co-operatives.The Co-operative Bank is dened by theseterms, and the diversication of the bank

was certainly a necessity so that it could

continue its work, which customers havebeen promised will not differ.Mayo continued, While member owner-ship is obscured it still exists in a pureform behind the business. Sometimesinvestors are brought into direct owner-

ship, and here the business can still beseen as member-owned if members retainmore than 50% of the equity. However,there are doubts as to whether in practicemembers can exert enough inuence tobe said to be still in control.So as long as the bank retains that system

throughout at least 51% of the company,it is, by denition, a co-operative, wherethe interests of its members come rst. Itis problematic however, when one consid-ers that a large proportion of the bank will

be in the hands of outside investors.

Although there may have to be some formof compromise in governance, its execu-tives certainly need to continue to advo-

cate ethical practices. And with stronggovernance, the Co-operative Bank cancontinue to serve its customers and the

wider community in which it operates.The next 12 months will therefore becrucial in the future of the Co-op. Theindustry and society will be severely let

down if it fails to maintain the ethicalleadership it has displayed over the pastfew decades.

Nicky Stubbs is ajournalist at Blue &

Green Tomorrow



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SWITCHINGYOUR CURRENTACCOUNT JUST

GOT EASIERBY TOM REVELL

The long-awaited current account

switching service was launched

in September across 33 banksand building societies.

The 750m government-backed project

guarantees that customers can changecurrent account providers within sevendays. It is aimed not just at reducinginconvenience, but also at shaking up theBritish banking sector, and it is hoped thatthe service will increase competition inthe market and loosen the grip of the bigbanks that dominate the market.The chancellor George Osborne said theservice is a powerful weapon whileKevin Mountford, head of banking atMoneySupermarket.com, called it goodnews for consumers.

The Payments Council, the body behindthe service, has announced that the ser-

vice is operating smoothly and has got offto a great start. Although it is too earlyto tell what switching levels will be over

the long term, gures show that morethan 35,000 people started to switch theiraccount in the rst two weeks.If youre interested in joining them, thenchoosing where to take your patronagemight not be so simple. Increased compe-tition will mean that banks ght to keep

their customers and to attract new ones.They have launched advertising cam-paigns, and offered a range of incentivesand, ultimately, bribes. All of this mightmake it even more difcult to decide

which bank is for you, especially whenthere is more to consider than simply

which will give you the best deal.

Fortunately, if youre thinking about mov-ing your money there are plenty of tools

that can offer practical advice. Which?which.co.uk and Money Saving Expertmoneysavingexpert.com both offerinvaluable tips for nding a bank account

which is right for you.

To do this, they help you gure outwhat kind of customer you are. Are youalways in credit? Or do you sometimesgo overdrawn? Working out factors suchas this can be crucial in nding the bankaccount that works out cheapest and mostrewarding for you.

Meanwhile, YourEthicalMoney.org

encourages banking customers to considerwhat their bank is doing with their mon-ey. Your money doesnt just sit waiting in

your bank account until you need it; yourbank lends it on to corporations, institu-tions and even governments. If you foundout your bank is lending your money toheavily polluting industries, arms manu-facturers or oppressive regimes, would

you let them continue?YourEthicalMoney.org has developed aneasy-to-use search engine see page 40 that

allows you to investigate your providersperformance in the areas which matter mostto you. It also provides a ve-step process tond out more about your existing bank andpotentially choose a new one:



To coincide with the launch of the newservice, campaign group Move Your Mon-ey moveyourmoney.org.uk has publisheda scorecard that also rates banks on their

ethical performances in. The so-called bigve Barclays, HSBC, Lloyds, the RoyalBank of Scotland and Santander are saidto be among the least honest and the poor-est performers in customer service. Mean-

while, top green rated performers includeCumberland Building Society, CoventryBuilding Society, Reliance Bank, LeedsBuilding Society, Metrobank, Handelsbankand the Islamic Bank of Britain.

According to statistics released in July byuSwitch.com, as many as 42% of currentaccount holders are likely to change banks

now that the service has been launched.However, contrasting research con-ducted for Sky News found that 82%of respondents say that they are happyenough with their current account and

are unlikely to change.

Indeed, the services start has not beenquite as positive as the Payments Councilmay have hoped. Some have argued thatit is encountering teething problems, fromcomplications with utility providers tobanks refusing transfer requests because of

missing information.Laura Willoughby, chief executive of Move

Your Money, said, Whats really becomingclear is that its still more than seven days.The guarantee gives people some reassur-

ance but theres certainly some teethingissues that have come through.Furthermore, she argued that theservice alone is not enough to revolu-

tionise the UK banking sector, as manyethical banks do not presently offercurrent account services.

The government still needs to deal withthe issues around the payment system,

which is blocking new banks and current

banks from offering current accounts, sheadded.

Its certainly not enough to create thecompetition that people want to see,because once people are looking to switchaccounts, they dont have much choice.When we get that choice, the real switch

up will happen.

Visit www.paymentscouncil.org.uk/switch_service for more information.

Tom Revell is a journalistat Blue & Green

Tomorrow

STEP 1 Research: What exactlyare your banks green and ethicallending policy? Are they carbonneutral, for example? Do they lendresponsibly? Research on their

website, or contact them directlyto ask.

STEP 2 Support: If youre happywith the answers you nd, let themknow, as it make help ensure thatthey maintain these policies.

STEP 3 Oppose: If youre nothappy, then theres even morereason to let them know. Make

yourself heard.

STEP 4 Switch: If your bankdoes not meet your ethical

standards, nd one that does. UseYourEthicalMoney.orgs bankingsearch to compare.

STEP 5 Stay informed: Usesources such as Banktrack tokeep up to date with your banksbehaviour.



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IT IS WELL ENOUGH THAT PEOPLE OF THE NATION DO NOT

UNDERSTAND OUR BANKING AND MONETARY SYSTEM, FOR IF

THEY DID, I BELIEVE THERE WOULD BE A REVOLUTION BEFORE

TOMORROW MORNING US INDUSTRIALIST HENRY FORD

THE STUDY OF MONEY, ABOVE ALL OTHER FIELDS IN ECONOMICS, ISONE IN WHICH COMPLEXITY IS USED TO DISGUISE TRUTH OR TO EVADETRUTH, NOT TO REVEAL IT CANADIAN ECONOMIST JOHN KENNETH

GALBRAITH

IT IS EASY TO DODGE OUR RESPONSIBILITIES,BUT WE CANNOT DODGE THE CONSEQUENCES

OF DODGING OUR RESPONSIBILITIES

IF YOU WANTTO CHANGETHE WAY YOUR

BANKING SYSTEM ISREGULATED, IF YOU

WANT TO LEARNTHE MISTAKES

OF WHATS GONEWRONG, THENYOU HAVE TO

CHANGE YOURGOVERNMENT CHANCELLOR OFTHE EXCHEQUER

GEORGE OSBORNE

BankingISAVERYT

REACHEROUSBUSINESS

BECAUSEYOUDONTREALISEITISR

ISKY

UNTILITISTOOLATE.I

TISLIKECALM

WATERSTHATDELIVER

HUGESTORMS

AUTHORNASSIMNICH

OLASTALEB

BRITISH ECONOMIST JOSIAH CHARLES STAMP

I believe that banking institutions are more dangerous

to our liberties than standing armies former USpresident Thomas Jefferson

WE DO RECOGNISE THAT THERE ARE AREAS WHERE THE CURRENT FI-NANCIAL SERVICES MARKET, THE BANKING MARKET, JUST ISN'T WORK-ING FOR CHUNKS OF THE BRITISH ECONOMY BUSINESS SECRETARY

VINCE CABLE

Banks need to think through their ethics very carefully, and many havedone so. I dont know any bank that dismisses the concept of ethicalbanking archbishop of Canterbury Justin Welby



THERE ARE

ALTERNATIVES



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TRIODOS BANK

At a recent event in Bristol, 500people gathered to discussbanking but not as we know

it. Talk of executive remunera-tion was replaced by discussions aboutenvironmental responsibility, as customersof Triodos Bank learnt rst-hand whattheir money was doing to benet society,the planet and culture.

As one of the oldest dedicated sustain -able banks in the UK market, Triodoshas become a formidable name not

only in the UK, but in continentalEurope. The Triodos Group as a wholeincreased its customer base by 40,000in the first six months of 2013, mean-ing now nearly half a million peoplebank with it across Europe.Headquartered in the Netherlands withbranches in Belgium, Germany, Spain andthe UK, the group made internationalprots of 25.1m in 2012, and in the rsthalf of 2013, racked up 15.6m. Mean-

while, the UK bank specically broke the

500m barrier in its lending to sustainablebusinesses and projects in March this year.Fundamentally, if you want to experi-ence the power of your money, then wecan give you a way of doing that, says

the banks charismatic UK chief executive

Charles Middleton.What youll get extra with us is thatwhile your money is with us, it will reallybe making things happen which I hopepeople feel really good about.The bank currently offers a wide rangeof products, from standard savings ac-counts, through to cash ISAs, equity ISAs,retail equity funds and direct investmentopportunities. The missing piece in itscurrent wares though is a current account

one of the most expensive and complexproducts for a bank to offer.For some time, one of the charges levelledat the alternative sector is that there are

simply too few day-to-day banking optionsavailable. However, at the event in Bristol an annual general meeting for custom-ers to connect with the projects they helpnance Middleton conrmed a rumourthat had surfaced a few months before:Triodos has plans in place to launch a cur-rent account.

When we made the announcement,there were resounding cheers from the

oor which is always encouraging, Mid-dleton laughs.

To be honest, though, we would expectthat from that group of people. They arepeople who are very obviously support-ing us in a very positive way. But there isbroader evidence of that appetite, and Ithink its a natural progression for us.We feel condent that in any way people

want to engage in the social or environ-

mental sectors, they can do that throughus. So it makes sense to launch a current

account so that people can actually bankwith us as well.Middleton, 56, spent 21 years at Barclaysbefore joining Triodos in 2003. Not youraverage bank chief executive, he told Blue

Tall Ships Youth TrustThe Tall Ships Youth Trustis a charity that is dedicated

to the personal developmentof young people through thecrewing of ocean going sail

training vessels. Founded in

1956 it is the Worlds oldestand largest sail training

charity for young peopleaged 12-25.



& Green Tomorrow in the 2012 editionof this guide that the banks mission and

values were absolutely aligned withwhat he wanted to do after two decades

in the mainstream banking arena.Twelve months down the line since ourlast in-depth conversation, his formeremployers have turned somewhat of acorner, with new boss Antony Jenkinsurging the banks 140,000 employees toquit if they didnt sign up to its renewedethical values.

One should applaud that, and at thesame time, challenge them to push thatthrough so it really becomes real, Mid-dleton says of Barclays.There have been some indications ofthese banks trying to take their businesses

forward in a direction that has more

responsibility, that takes the whole issueof their presence in society more seriously,but lets be honest, I think the jury is still

very much out in terms of whether thatsreally going to have the impact we wantit to have.

I would support any initiative that is go-ing to help move these banks in the rightdirection, but I think its very early daysin terms of how they really are. Im anoptimist; I think the banks have hit a seri-ously low point and it is shameful that the

nancial sector has got into this position.My sense is that we cant get any lower,but weve been proved wrong on that be-fore. What is really encouraging, though,is that there are denite signs of people

making more conscious choices. That will

not only help us, but it will also inuencethe banks to change.Triodos remains a kingpin of sustainablebanking in the UK. Its current account is

set to be launched at the back end of 2015or in early 2016, and the bank has alsorecently unveiled a pair of ethical invest-ment funds in an effort to widen its impact.But why do people bank with Triodos?What are their motivations? One custom-er at its AGM recently told Blue & GreenTomorrow, I feel its important that nan-

cial organisations have a benecial impacton society rather than a detrimental one.A simple explanation, and one that sug-gests banking contrary to popular belief does not have to be evil after all.

KEY STATS:Founded: 1995 (Dutch parent

group launched in 1980)

Specialisms: Using money or

positive social, environmental

and cultural change

Customers: Individuals and

businesses

Website: www.triodos.co.uk

THERE ARE DEFINITE SIGNS OF PEOPLEMAKING MORE CONSCIOUS CHOICES. THAT WILLINFLUENCE THE BANKS TO CHANGE

Callander Youth Project TrustCallander Youth Project Trust (CYPT)is an independent, voluntary youthorganisation. CYPT delivers a widerange of activities for young people;including youth clubs, job club, holi-day programmes, art sessions, as wellas health and sport initiatives. CYPTalso delivers bespoke employabilitysupport for young people who haveleft school and are looking for work.



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Apply for an account at the worlds leading sustainable bank.

Every small act can set something big in motion. What you eat. How you commute. What you do in

your community. Start making a positive change. Apply for an account at Triodos Bank, and make

your savings work harder. Financially, socially, culturally and environmentally. Go to triodos.co.uk.

SET

SOMETHING

BIG INMOTION

Triodos Bank NV (incorporated under the laws of the Netherlands with limitedliability, registered in England and Wales BR3012). Authorised by the DutchCentral Bank and subject to limited regulation by the Financial Conduct Authorityand Prudential Regulation Authority. Details about the extent of our regulation bythe Financial Conduct Authority and Prudential Regulation Authority are availablefrom us on request. Registered oce: Triodos Bank, Deanery Road, Bristol BS1 5AS.


27/52



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Over a decade ago at 11Downing Street, GordonBrown then chancellor ofthe exchequer in Tony Blairs

Labour government cut the ribbon on abank that had just secured approval fromthe regulators.

In Browns own words, though, this wasmore than just another bank. It had,he said, an emphasis on nancing, notjust fundraising; investing, not just giving;fostering a new spirit of self-sufciencyin the voluntary sector and changing the

way people see their own communities.At the time, former Bank of Englandgovernor Sir Edward George said, Ican't over emphasise the importancefor all of us in both economic and socialterms of bringing those on the outsideinto the mainstream.The bank in question was Charity Bank.

Whereas Brown has elevated to and de-scended from the frontline of British poli-tics in the 11 years since, Charity Bankhas transcended from a small start-up toan increasingly popular option for socially-

conscious individuals looking to exit the

stranglehold of the mainstream banks.Lending solely to charities and socialenterprises using money from investorsand depositors, it is now one of the lead-ing alternative options away from the highstreet. Its 2012 report says that two-thirds(66%) of the projects it has funded wouldhave been untenable without its nancialbacking. Meanwhile, 95% of borrowersclaim that Charity Banks loan had made amajor or signicant contribution to thefullling of their core mission.In March 2013, the bank underwenta fairly fundamental change. Havinglaunched as a registered charity and an

authorised bank in 2002, the organisationannounced its intention to cease to be

a charity. New banking regulations hadbegun to make it difcult for Charity Bankto operate simultaneously as a regulated

bank and a charity. The move to changeits status, it said, would enable the bankto raise capital from a wider community ofsocial investors, helping to boost its lendingto the charitable and social sectors.

CHARITYBANK

Hebridean Whale and Dol-phin TrustThe Trust has a oating classroom

where school children can learn

about local sea life. Charity Bank has

provided several loans,most recently 20,000 for essentialrepairs and 5,000 for workingcapital.www.whaledolphintrust.co.uk

Not one depositor withdrew money fromCharity Bank on the ground of our changein status, says Patrick Crawford, the

banks chief executive.A few raised questions, to which weresponded, but were not aware thatsignicant concerns were expressed to theCharity Commission either.We felt that by setting out the ration-ale and background, and by providingreassurance that our mission and ourapproach to the mission would not bechanged, our supporters could feel con-dent that we would stay the same safe, so-cial purpose bank that they had invested

in or deposited money with.Having spent 26 years at Deutsche Bank,and also working in fund managementfor Africa with a number of European aidagencies and as a civil servant, Crawford



replaced former chief executive MalcolmHayday in November 2012.The decision to drop Charity Banks chari-table status was made prior to his arrival.What borrowers will see is an ability tomake bigger loans and to make more ofthem, he told Blue & Green Tomorrow inMarch, adding that the banks emphasis will

remain on making relatively small loans.They will be the beneciaries of what

will be a rather larger bank with morerepower to lend to the sector. We will re -main a mission-driven and impact-focusedbank and our ability to grow means that

we will achieve nancial sustainability.We havent achieved this yet because ofour relatively small size, but it is in theinterests of the sector.Crawfords three-year vision for theorganisation includes helping the bank to

grow and raise new capital to support thisgrowth something helped by its newstatus. And research conducted in 2013suggests the need for a bank like Char-

ity Bank is as strong as ever, with 69% ofcharities saying they had been unsuccessful

in getting loans from one of the big banks.All the evidence that we have is thatthere are continuing market failures in theprovision of debt to smaller charities andsmaller social enterprises and that the origi-nal vision that led to the creation of the

bank in 2002 holds good, says Crawford.

The board is clear that in order to respondto that demand, we should grow and en-sure that were an enduring institution thatcan be available to respond to the needsof the sector, that is within the sector,

understands the sector and is committed toenabling the sector to achieve the impactsthat our borrowers wish to make.The mission is quite simply to do moreof the same on a bigger scale, so thatmore beneciaries can benet from theactivities of our borrowers and help themto achieve their purposes on a stronger

and better basis.But with growth comes greater responsi-bility. Charity Bank currently runs opendays this year held in London and Man-chester, with plans to expand that reachas its customer base expands - whichallow borrowers, savers and investorsto congregate and talk about what their

money is doing, and it also puts on Differ-ent Journeys events where savers can visitcharities have received one of its loans.

For Crawford, this is an aspect of his

bank that he wants to retain: Its quiteimportant for us to retain that sense ofpersonal contact. Savers can see and talkto the banks management, they can sharea table with a borrower and bank staff,and they can feel part of a community

with a shared interest. We think there isclose alignment between the savers, thebank, its board and staff, and its borrow-ers and that this is a distinctive feature of

the bank.Keeping this personal touch the abilityfor customers to meet the people look-

ing after and investing their money iscrucial if Charity Bank wants to remain ahaven for socially-conscious individuals.

Particularly at a time when one of themajor failings of the mainstream banks

according to numerous independentsurveys is the impersonal treatmentthey hand out to customers.There is a lot of appetite from consum-ers for a more diverse nance sector,Crawford concludes.

The government is keen to promote thechallengers to the large banks and there-

fore, there is support for new forms of de-livering nancial products to SMEs or tothe social investment sector be it throughcrowdfunding platforms or through alter-native forms of social purpose banks.There is also ample evidence that theethical consumer market is growing inthis country, and banks such as Char-ity Bank that combine a nancial return

with a social return are responding to

this growing movement, which has beenreected by consumer attitudes in lots ofother walks of life.

KEY STATS:Founded: 2002

Specialisms: Lends to the

charitable and social sectors

Customers: Individuals andorganisations

Website: www.charitybank.org

Voluntary Action CalderdaleThis charity provides infrastructure support to local

volunteer groups. A loan of 220,000 helped buyand renovate new premises, extending the organi-sations reach and helping it to reduce costs.www.cvac.org.uk



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Registered Office: The Charity Bank Limited, 194 High Street, Tonbridge, Kent TN9 1BE. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authorityand the Prudential Regulation Authority No. 207701. Member of the Financial Services Compensation Scheme (FSCS). Company registered in England and Wales No. 4330018.

a different bank for people

who want a different world

Charity Bank was established in 2002 to be a different kind of bank, lending tocharities and social enterprises so that they have access to the money they need,when they need it.

To date, we have approved over 180 million in loans to more than 1,000 charitiesthat support people and communities across the UK.

To find out more visit www.charitybank.org or call us on 01732 774040

Making a bigger difference



Jenkins had outlined were already atthe heart of their organisations, and hadbeen for years.

We have social change and community

benet at the heart of everything wedo, says Peter Kelly, business develop-ment and marketing director at UnityTrust Bank a specialist bank for socialenterprises, charities, trade unions,councils and other organisations operat-ing in the social economy.Formed in 1984, its grounding princi-ples which remain as strong as evertoday include phrases such as em-bracing the philosophy of the commongood and not principally inuenced

by the maximising of the prot motive.Given the scandals and irresponsibilitythat litters our newspaper front pagesabout banking, with these uncharac-teristic values, you start to question

whether Unity Trust is a bank at al l.But a bank it certainly is. But one thatseeks to achieve social impact in every-thing it does,

Our mission is to achieve growth by be-ing socially-focused, customer-centred andcommercially-driven, explains Kelly.We take great heart by the fact mostof our customers want to do business

with us because were specialist andcustomers often feel that we are alignedto their values.

As well as the obvious cultural andethical differences between it and the

high street names, Unity is set aside inanother way, in that its customers are

very specic. It doesnt offer bankingservices to individuals (and has no plansto), and instead focuses entirely on thesocial economy.

Among its customers are housing

UNITY TRUSTBANK

I

n January of this year, Barclayschief executive Antony Jenkinsmade a bold statement to thebanks 140,000 employees across

the world. Unveiling a set of ve ethicalvalues respect, integrity, service, ex-cellence and stewardship he called onstaff to quit if their own morals didntsit squarely with their employers.The rules have changed, he said.You wont feel comfortable at Barclaysand, to be frank, we wont feel comfort-able with you as colleagues.His comments were welcome, giventhe 12 months the bank had had including the Libor xing scandal, tax

avoidance accusations and executivepay revolts.But some of the smaller players in thebanking world were left scratching their

head, for the ve-pillared ethical values



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associations, trade unions, communitydevelopment nance institutions(CDFIs), councils and communityinterest companies.The other thing for us is that all thestaff at Unity believe passionately in thebanks values, Kelly adds. Equally,

we have very high levels of customersatisfaction.He describes Unitys staff as thebanks most important asset. Andfor evidence of its commitment to thepeople who work for it, it introducedan employee ownership scheme earlierthis year.

The governments independentadviser on employee ownership,

Graeme Nuttall, outlined the benetsof employee ownership in a recentreview. Such schemes, he said,[create] successful businesses in whichemployees enjoy working and whichdeliver wider benets.For an organisation that talks about be-ing here to promote the common good,and to provide social and communitybenet, it is just entirely right for us toenable our people to have a stake in theorganisation, Kelly says.

Were not moving to a model of entireemployee ownership, but this is reallyimportant in the cultural progress andfuture of Unity Trust to enable ourpeople to have part-ownership of the or-ganisation to make them feel part of it.If you look at research, you nd thatemployees who have a share in anorganisation tend to have lower staff

turnover, better staff morale and inturn, we strongly believe that will leadto even better customer satisfaction,because our people are involved in theorganisation. It was a no-brainer to us,and its been extremely well received byour employees.

As well as this, in April, Unity Trust

became the rst British bank to receiveLiving Wage employer accreditation.Employers with this certication payall workers over the age of 18 rates ofat least 8.55 an hour in London, and

7.45 elsewhere in the UK signicant-ly higher than the national minimum

wage of 6.19 for employees aged 21and over.

Richard Wilcox, the banks managingdirector, said at the time, As asocially responsible bank founded onstrong social values, this is a naturalstep for Unity.Its hoped that this emphasis on itsstaff as well as its strong, sociallyresponsible founding principles places Unity Trust head and shouldersabove mainstream banks competingfor similar customers.Kelly concludes, My message to anyorganisation choosing a bank is to think

beyond just the numbers, and insteadthink about whether the bank theyreintending to do business with aligns

with their own values.


Specialisms: Banking

services or the social

economy

Customers: Civil society,social enterprises, CICs,

councils, and trade unions

Website: www.unity.co.uk

Unity Trust Bank recently lent 3.5m to SandwellCommunity Caring Trust, a charity that provides hous-ing and care services for disabled and elderly peoplein the West Midlands. The loan enabled it to purchaseHall Green residential care home in West Bromwich,

which it will use to deliver a high-quality, 62-bedspecialist home for people with dementia.



We are the bank fortheSOCIAL ECONOMY

WE ARE UNITY

Join us and well create

social impact together.Find out more:

www.unity.co.uk

@unitytrustbank

Unity Trust Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. UnityTrust Bank is entered in the Financial Conduct Authoritys register under number 204570. Registered Office: Nine Brindleyplace, Birmingham, B1 2HB. Registered inEngland and Wales no. 1713124. Calls are recorded and may be monitored for security, quality and monitoring purposes.UTB 390 / October 2013

As a social enterprise ourselves,

we know that by providing much

needed banking and finance to

charities, social enterprises, housing

providers and CDFIs, we are helpingimprove the fabric of society by

creating jobs, improving wellbeing and

retaining wealth in local communities.



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ECOLOGYBUILDING

SOCIETYPAUL ELLIS, CHIEF EXECUTIVE OF ECOLOGY BUILDING SOCIETY, BRINGS BLUE & GREENTOMORROW UP TO SPEED ON WHAT HAS HAPPENED OVER THE LAST 12 MONTHS ATECOLOGY, IN SUSTAINABILITY AND IN BANKING.

economy and the needs of communitiesand ordinary people.

Is moving to an alternativebank like Ecology moreattractive than a year ago?I dont think any of the reasons whypeople have been minded to move havegone away. I dont think there has beenfundamental reform in our banking sector.There are various policy signs to suggestthe problems are being recognised and

weve seen a greater emphasis on better

conduct from the regulators, particularlythe Financial Conduct Authority, but Idont think the mindset has changed.Without the institutional reform, many ofthese initiatives will be doomed to failureand will be unable to achieve their full

potential. Thats quite worrying.More specically, were disappointedin the events at the Co-operative Bank,

which havent done the sector anyfavours. Fortunately, it appears that peopleunderstand that this is not a reection on

ethical banking generally speaking. Thisis perhaps a chance for those banks andother nance institutions like ourselves

who really are committed to theseprinciples to articulate our values and to

Talk us through the last 12months at Ecology.Weve continued to make good nancialprogress. Weve had continued growth,continued protability, and again, lowlevels of arrears and losses. So we feel

were coming through the nancial crisisin pretty good shape.Weve been recruiting across the businessas we look to take ourselves onto the

next level. And we recognise there is stilla lot to do within our main objectives, interms of promoting energy efciency in

our general housing stock, and our otherstrands such as taking more active roles inaffordable housing.

Weve been involved in the launchof the Empty Homes initiative, theNational Empty Homes Loans Fund. Its

very much at a pilot stage, and therellbe some learning and rening as wego forward, but were certainly veryexcited to be involved.

Institutionally, weve joined the GlobalAlliance for Banking on Values which

is a major international network ofsustainable banks. This will enable us toconnect with those banks that are intent

on moving banking to a place where itfulls its proper role of nancing the real



demonstrate their practical application.The work were doing with the GABV

again reinforces this.

One big gripe amongmany individuals is thelack of options availablefor alternative, ethical orsustainable current accounts.Can Ecology address this?Its very possible that you will see, inthe relative short-term, a number ofmutuals coming forward with sustainablecurrent account options. Thats not tounderestimate the amount of work thatsneeded to actually achieve this, becausethe way the industry is structured meansthere are very high hurdles to overcome.But theres a determination amongsta number of organisations, includingourselves, to make those options more

widely available.

Ecology was named Companyof the Year and Financier of

the Year at the New Energy& Cleantech Awards 2013.

What did those accoladesmean to you?Theyre an endorsement of what wevebeen trying to do over a long periodof time: to help create a market in this

area, and to demonstrate long-termcommitment to the renewables sector,

within the overall framework of aneed to improve the energy efciencyof our homes, and the whole way in

which we deliver energy in terms of itsenvironmental impact.

Why do people move to Ecology?People who move to Ecologyunderstand that weve got a goodnancial track record over many years,but their main reason is usually a desireto know whats actually being done

with their money how their personal

capital is being deployed.We direct a lot of energy into makingit clear exactly what we intend to do

with our members money, and what weexpect the outcomes to be of that activity.Thats what people value.

What do you see of the futureof sustainable banking in thecoming years?Well see some convergence, hopefully amovement towards more support for the

real economy from mainstream banks.The sustainable banking sector will reallylead the way in this because it doesnthave the distractions that the mainstreambanks do: it has a very clear focus on

establishing the building blocks of an

emerging sustainable economy.

You have one thing to say tosomeone to convince them toswitch to Ecology. What is it?

Ask your bank how your money isdeployed. Then ask yourself if you can havepeace of mind about how the interest youreceived is generated. How is your moneybeing used in the real world? Does that t

with who you are and what you believe?


Specialisms: Ofers

sustainable mortgages or

properties, unded through

its savings accounts

Customers: Individuals and

organisations

Website: www.ecology.co.uk



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Wallander and a small team of people leda complete turning upside down of thebanks structure.

What is the theory behind thisdecentralised model?Wallanders central thesis was that thereare only two things you need as a service

organisation to be more protable thanyour competitors. One is to have more

satised customers than your competitors,and the other thing is to have lower costs.

On that basis, there is no choice if youreprepared to put your money where yourmouth is, but to devolve decision makingto local branches. Once that decision hasbeen taken, then there are two reasons

why it makes no sense whatsoever tohave targeting sets in the centre.

One is that the centre has a much lessclear view on what is realistically achiev-

able, so those targets may be under or

overambitious. But secondly, if the pointis really about customer satisfaction, thetargets are completely irrelevant. The onlytarget is that you make sure that you keep

your customer satised.

HANDELSBANKENWITH ROOTS IN SWEDEN AND AN EMPHASIS ONDECENTRALISATION AND PERSONAL CUSTOMER RELATIONSHIPS,HANDELSBANKEN HAS QUIETLY BECOME ONE OF THE MOSTATTRACTIVE SUSTAINABLE BANKING ALTERNATIVES ON THEMARKET. ITS UK HEAD OF COMMUNICATIONS, RICHARD WINDERTALKS TO BLUE & GREEN TOMORROW.

Tell us about Handelsbanken.Handelsbanken has been around since1871. It grew as a fairly normal bankbut in the late-60s, it and most otherbanks in Europe were experiencingmilder versions of some of the problemsbanks are having today, and I supposerather daringly, the board of Handels-banken at the time contemplated quitea radical change in the operating struc-ture of the organisation.

They had seen a smaller provincial bankin Sweden that was eating into Handels-bankens market share by running a verydecentralised organisation with local

branch managers taking the day-to-daydecisions. The board was interested intalking to the person who made thathappen, and so spoke to the CEO of thatsmaller provincial bank, Jan Wallander,and from those discussions, asked him ifhe would consider doing the same but at

Handelsbanken.Thankfully, he said yes, as long as he

was able to implement this decentralisedmodel in full, which was a tall order. Theboard agreed to this, and in the early-70s,



Why is the model successful?Our measure of success has absolutelynothing to do with growth. We donttarget growth. If it happens, its very nice,but its not what were looking for.We have one relative target and that is,

in any given year, be more protable thanthe average of our banking competitors inour home markets.The only two ways we seek to achievethat are through happier customers overthe longer term, and lower costs - thatsthe other part of the equation. If youput people in genuine control, they dotake very personal control over thingslike costs.

Is there a typical

Handelsbanken customer?We dont have a typical customer aseach of our experienced local branchteams each decide who they do business

with. However, we do not see size orwealth, and instead our customers tendto reect our own values here at Han-delsbanken: they tend to be in very goodcontrol of their nances; they tend to benancially prudent; and almost all of them

want a long-term banking relationship.Were quite honest in saying that thereare lots of people who dont see the ben-et of a banking relationship as such, andat different stages in life, peoples need forthat may well vary.To become a Handelsbanken customer,

you have to get to know the bank.

If youre someone who actually justwants an overdraft facili ty and to draw

money out of a cash machine, oftenyou ll say that a relationship bank isnot what you need.

How does sustainability relateto your model?We would probably come from theother side than the norm when we hearsustainability. Does the business modellend towards sustainable behaviour? Andobviously, in so many ways ours does.It is a very low risk business; it tends tobe countercyclical. When theres a boom,

we tend to put the brakes on because thedecisions are being taken at a local level

so our managers can clearly see whenthings are getting a bit risky.

But of course, when a crash comes as itdid in 2008, we were in a very good posi-tion so didnt have to take any help fromshareholders, the state or taxpayers.

Are you an ethical bank?We very much hope that we are a bankthat happens to behave ethically, but

wouldnt set ourselves in a pigeon holeto say were an ethical bank in capital let-ters. Were a bank that has a sustainablemodel because its good, sound business

sense and commercially it works as well.If people look at scandals and the like,then the obvious trigger point would bean internal thought process around ethics.

And then it would be quite natural to look

for an ethical provider, and a lot of goodcan be said for such players.

You have to remember, though, thatthere are those who are not using what

they read in the newspapers to have tolook for alternative banks, but actuallytheyre being arbitrarily forced to do thathaving been a good banking customeroften for generations. They may not beled rst and foremost by a disgust of theorganisations values. They might justneed a bank that can support them andthat they can build a relationship withlocally, rather than remotely.There are dark greens and there are light-er greens. We would be lighter greens inthe sense that our business model doesntstart at the point of ethics. We take thatas a given. Its more that we must satisfyour customers, and if you start there,

you tend not to do things like proprietary

trading or only dealing with foreign callcentres or paying egregious bonuses. Why

would our customers be happy with that?

KEY STATS:Founded: 1989 (with roots in

Sweden dating back to 1871)

Specialisms: Local

relationship bankCustomers: Individuals and

organisations

Website: www.

handelsbanken.co.uk



THE

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unions are regulated by the PRA and itssister regulator the Financial Conduct

Authority (FCA). Like with normal savingsaccounts, all members savings are alsoprotected up to 85,000 by the FinancialServices Compensation Scheme.

Why choose credit unions over

a bank or building society?Firstly, credit unions can offer great rateson savings and loans. Studies have shownthat even at their highest loan rates, theyoffer best value in the UK personal loanmarket for loans up to 2,000 and 3,000

where rates for larger loans were kept at1% a month on the reducing balance. Forsmaller, shorter term loans, a credit unionmember can borrow at a 10th of the inter-est rate of a doorstep lender, or a 100th ofthe interest rate of a payday lender.

A recent study found that, perhaps unsur-prisingly, consumers prefer lending fromcredit unions than payday loan compa-nies. The research, which was fundedby Friends Provident Foundation and theBarclays Community Finance Fund, foundthat borrowers could take out a longer

payment term whilst paying back less thanthey would from a payday lender. Borrow-ing from a credit union instead could havesaved 1,219 people 145,000 in interestcharges alone - equating to almost 119per consumer.

Although much of the coverage came tofocus on the Church of Englands unfor-tunate indirect investments, in July thearchbishop of Canterbury Justin Welbydeclared he would be attempting compete

CREDIT UNIONS:A GROWINGMOVEMENT

union may exist, for example, for peoplewho may work in a certain sector or livein a certain area.Institutionally, credit unions are of course

very different from high street banks. Someof the larger credit unions have branches

that operate like many banks, with collec-tion points such as local post ofces, whilesome smaller unions will have just a coupleof opening hours a week. Credit unions arealso managed by volunteers elected from

the membership, by the membership.Credit unions are small organisations andlack the enormous amounts of nancialbacking of the big banks. Many creditunions limit the total you can save withthem to 10,000.However, although credit unions oftendescribe themselves as not-for-protorganisations, they do make small returns,or surplus. A credit unions takings fromloans and investments must exceed itsoperating expenses in order to maintaincapital and stay solvent. This surplus isdistributed among members as a dividend,or used to nance offers of higher returnson savings, more affordable loans, lowerfees and new products and services.It is also important to remember that credit

ACCORDING TO PRUDENTIAL REGULATION AUTHORITY (PRA)AUDITED STATISTICS FROM THE ASSOCIATION OF BRITISH CREDITUNIONS (ABCUL), AT THE END OF SEPTEMBER 2012, 1,038,904PEOPLE USED THE BRITISH CREDIT UNION SECTOR, WHICH HELDTOTAL ASSETS OF 957M.

BY TOM REVELL

In the six months between September2012 and March 2013, the sec-tors membership grew by 3.2% to1,072,202, while its assets rose by

6.7% to 1.02 billion.Around the world there are over 200mcredit union members in 100 countries.Their recent rise is consistent, if steady. Itseems there are many reasons that savingmoney in a credit union, rather than abank or building society, is becoming an

increasingly attractive option to consumers.

What is a credit union?A credit union is a nancial co-operativethat is owned by its members. They existprimarily to provide savings and loans tothese members. However, increasing num-bers of credit unions now offer a wider

range of services including cash ISAs, thecurrent accounts and mortgages.Their contrasting ownership structuresmeans that unlike banks, they are notultimately motivated to create prot forexternal shareholders. Abbie Shelton,policy and communications manager at

ABCUL, says, This also means that theservices they provide are designed withthe needs of members in mind; a credit


39/52



THE

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BANKING

BANKING SCORECARDPOWERED BY YOURETHICALMONEY.ORG, AN EIRIS INITIATIVE

Green/EthicalProducts

EthicalLending

orInsurance

HumanRights

FinancialExclusion

Environment

CarbonNeutrual

EqualOpportunities

Womenonthe

Board%

Green/Ethical Products

Ethical Lending or Insurance

Human Rights

Financial Exclusion

Environment

Carbon Neutrual

Equal Opportunities

Women on the Board %

Aldermore

Allied Irish Bank (GB) and Allied Irish Bank (GB) Savings Direct

Aviva

Bank o ChinaBank o Ireland UK

Bank o Scotland

Barclays (incorporating Woolwich and Standard Lie)

Birmingham Midshires

Britannia

Cahoot

Charity Bank

Chelsea Building Society

Cheltenham & Gloucester

Citibank (UK)

Clydesdale Bank

Co-operative Bank

Coventry Building Society

Danske Bank UK

Ecology Building Society

First Direct

First Trust Bank

Habib Bank UK

Haliax

Handelsbanken

HSBC Bank

ICICI Bank UK

FINANCIAL INSTITUTIONS CRITERIA

11

9

11

2510

30

17

30

17

18

22

27

30

23

16.7

17

18

31

33

25

9

10

30

27

25

14

N

N

Y

YY

Y

Y

N

Y

N

Y

N

N

N

Y

Y

N

Y

Y

N

Y

N

Y

Y

Y

N

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

Products that oer a green/ethical value or incentive to

the customer.

Does the institusion reuse to lend money or provide

insurance because o the unethical nature o a govern-

ment or business?

Does it avoid lending to or insuring companies and activi-

ties involved in human rights violations? What systems

are in place to monitor this?

Does the institution make any provisions or low-income

individuals or oer products to underprivileged com-

munities?

Considers whether the environment policy covers the key

areas o energy efciency and waste management.

Has the institution made a pledge to go carbon neutral

and i yes, when?

Does the institutions policy consider race, gender, sexual-ity and disability?

Check out what percentage o an institutions board or

senior managers are emale(percentage ound rom the

highest level o management whitin the companys group).



ING Direct (renamed Barclays Direct)

Intelligent Finance

Islamic Bank o Britain

Julian Hodge Bank

Lloyds TSB

M&S Bank

Metro Bank

MINT

National Counties Building Society

Nationwide Building Society

NatWest

Norwich & Peterborough Building Society

Post Ofce Personal Banking

Reliance Bank

Royal Bank o Scotland (RBS)

Sainsburys Bank

Santander

Scottish Widows

Secure Trust Bank

Smile

Standard Lie Insurance

Tesco Bank

The AA

Think Money

Triodos Bank

Ulster Bank (Northern Ireland)Virgin Money

West Bromwich Building Society

Yorkshire Bank

Yorkshire Building Society

17

30

0

0

30

20

33

16.7

18.1

33.3

27

40

9.1

25

25

18

30

11.1

17

20

30

33.3

33.3

14.3

10

16.7

27

N

N

Y

N

Y

Y

N

N

Y

Y

N

Y

Y

Y

N

Y

Y

Y

Y

Y

N

N

Y

Y

Y

Y

N

Y

N

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

Green/EthicalProducts

EthicalLendingorInsurance

HumanRights

FinancialExclusion

Environment

CarbonNeutrual

EqualOpportunities

WomenontheBoard%

FINANCIAL INSTITUTIONS CRITERIA

WORSE BETTER

To nd out more, visit YourEthicalMoney.org/banking.

Information on the www.yourethicalmoney.org website has been obtained from sources thatEIRIS and the EIRIS Foundation (hereafter EIRIS) believe to be reliable. However EIRIS doesnot guarantee its accuracy, completeness or that it is up-to-date. To the best of our knowledge,EIRIS believe the data to be accurate at the dates given in each prole. This information isintended for the exclusive use of the parties to whom it was provided by EIRIS. Its contentmay not be modied, sold or otherwise provided, in whole or in part, to any other person orentity, without EIRIS permission. EIRIS shall not be liable to Blue & Green Tomorrow and orits readers for any loss or damage or loss of prots suffered by Blue & Green Tomorrow and orits readers as a result of any use made by them of information provided by EIRIS. EIRIS will

The Guide to Sustainable Banking 2013

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