Social Banking

1

• Social Banking
• and the example of
• Merkur Cooperative Bank
• Denmark
• Presentation ESF Malmö, September 2008

2
The approach to banking

• Banks are businesses and nothing else!?
• Present financial crisis raises serious
  questions. Why do governments save banks?
• Banks do play an important role in society as
  distributors of capital.

3
The approach to banking

• Through capital distribution future society is
  built
• How to combine societal responsible capital
  distribution with business?

4
Banking movements with societal approach in
history

• Savings banks movement social economy 100 years
  ago. Locally based.
• Remains in some places as important social
  economy players
• Social bank movement from 1980s. Based on vision
  of a sustainable society.
• Microfinance, fight against poverty

5
Important Social Banks in Europe

• GLS Bank, Germany, founded 1974 with roots back
  to 1962 with the foundation GLS Treuhand
  Foundation.
• Triodos Bank, Holland, founded 1980. Today also
  branches in B, UK, ES.
• ABS and BCL, Switzerland
• Banca Etica, Italy
• La NEF, France
• Charity Bank, UK
• Ekobanken, Cultura Bank and Merkur Bank,
  Scandinavia

6
Social Banks Cooperation and Networks

• Regular common conferences since mid 1980s
• Bilateral cooperation on lending, investment
  funds etc.
• Global Network INAISE, www.inaise.org
• Institute for Social Banking, education and
  research, www.social-banking.org
• European Network FEBEA, www.febea.org

7
Merkur a social bank in Denmarkand an
unconventional story of the founding of a bank

• organised as a cooperative bank
• Full banking licence
• 4 branches in major Danish cities
• appr. 13.000 clients
• 45 employees
• balance sheet total gt 1 B DKK. (140 m )

8
Historical background

• Merkur is founded 26 years ago, in 1982
• Civil society background, with inspiration from
  i.a. GLS Bank in Germany
• Founded as a credit- and saving association,
  transformed to a cooperative bank in 1985
  (Harmonisation of European banking legislation)

9
Objectives - mission (1)

• The objectives of Merkur are
• To give the individual in freedom the optimum
  conditions for developing his abilities, thus
  enabling him to act based on his own insight.
  Consequently, we fund independent schools,
  educational institutions and cultural
  initiatives, also for mentally disabled people
  and other special groups

10
Objectives - mission (2)

• To treat all people with dignity. Hence we
  finance new, contemporary types of ownership and
  social communities within e.g. agriculture,
  production, trade and housing settlements,
  projects for socially disadvantaged youths and
  children or projects for mentally deficient
  children and adults

11
Objectives - mission (3)

• To have production and consumption reflect the
  real needs of society and the individual, and to
  have it done with due account being taken to the
  human being, nature and the environment. Hence we
  finance organic and biodynamic farms, renewables
  and sustainable production and trade.
• Summarizing guide sentence
• We want to work towards a situation which we
  regard as ideal Where the individual, based on
  his own insight, meets the needs of others in a
  dignified way.

12
Stakeholder value principle

• Stakeholders Shareholders, depositors,
  borrowers, employees, surrounding society
• All stakeholders have to find a relationship with
  Merkur meaningful, also financially
• Balance between shareholders interests and the
  other stakeholders interests
• We earn profit, but no profit maximation!

13
Transparency principle

• In a conventional bank you do not know what you
  money finance. Weapon industry? Chemical
  industry? Exploitation of developing countries?
• Social banks want to be transparent
• Most social banks have detailed information on
  their loan portfolio available.
• Use your money as a tool for impacting society!

14
Merkur Loan Portfolio 2007
15
Further questions?

• Lars Pehrson, CEO
• pehrson_at_merkurbank.dk
• www.merkurbank.dk