26th OSCE Economic and Environmental Forum Venice, 24-25 May 2018 “Promoting economic progress and security in the OSCE area through innovation, human capital development, and good public and corporate governance” Session V: Strengthening good public and corporate governance through transparency and accountability

1. 26th OSCE Economic and Environmental Forum
Venice, 24-25 May 2018
“Promoting economic progress and security in the OSCE
area through innovation, human capital development,
and good public and corporate governance”
Session V: Strengthening good public and corporate
governance through transparency and accountability
ETHICAL BANKS CONTRIBUTION TO
GLOBAL PROGRESS (AND HOW TO
HELP THEM)
Alessandro Messina
Director General, Banca Etica (Italy and Spain)

2. WHO WE ARE
• Banca Etica is a cooperative bank operating in Italy since 1999 and in
Spain since 2014. Its roots are in the Italian experience of nonprofit
solidarity-based economy and in the global fair trade movement, both
developing during the late ‘70s and needing a sort of “homeopathic
finance”.
• Thousands people and hundreds non-profit institutions thus founded a bank
inspired by the principles of ethical finance: participation, transparency,
efficiency, awareness of the non-economic consequences of economic
actions.
Banca Popolare Etica

3. HOW WE WORK:
1) PARTICIPATION & DEMOCRACY
(an Open Bank)
• Banca Etica is independent from politics and economic-financial groups: owners
are 42,000 among citizens and civil society organizations.
• About 100 groups of active members guarantee local relationships on
territories and contribute to the strategic orientations of the bank.
Banca Popolare Etica

4. HOW WE WORK:
2) TRANSPARENCY
(we tell you where your money goes)
Banca Popolare Etica
• Banca Etica is the only Italian bank (and among the few all over the world)
publishing on the web all loans devoted to business and nonprofit entities: with
name of institution, amount financed, technical form of the loan, duration, sector
of activity, location.
• Anyone can connect on our website, search for the data, know more about who
we finance.

5. HOW WE WORK:
3) EFFICIENCY
(ethical finance is not philantropy)
Interest
Margin
Gross
Margin
Income
before taxes
Net
income
2.3 mln €
Income 2017

6. Any credit request is investigated from a triple
perspective: (1) economic & financial sustainability,
(2) social and (3) environmental assessment of the
loan applicant and of the project. Several
parameters are considered such as: quality of
governance, gender and diversity practices, respect
for the environment, employees’ working conditions,
commercial fairness, reputation, etc.
This process involves the Social Evaluators,
members of the bank who voluntarily carry on part of
the assessment (appropriately trained).
Loans portfolio
2017
HOW WE WORK:
4) IMPACT
(non-economic consequences of economic actions)

7. WHERE WE ARE GOING
SAVINGS
€ 1,382 MLN
SHARE CAPITAL
€ 65 MLN
LOANS
€ 1,115 MLN
Non Performing Loans on total exposures 3.92%
with a Net Default ratio at 0.88%

8. Banca Etica finances welfare, green economy, microcredit and selfemployment,
international cooperation, culture and sport.
WHAT WE DO

9. During the crisis we started to provide financial
support to employees from companies in
bankruptcy:
WORKERS BUY-OUT
• 34 companies and 14,3 mln € loans approved
• 863 jobs saved
WHAT WE DO - BEST PRACTICES

10. MICROFINANCE
Banca Etica’s microfinance projects are for:
• social inclusion (in support of vulnerable people: 1.580 loans for 10 mln €, since 2001)
• entrepreneurship (to startup or consolidate micro-enterprises: 2.278 loans for 16,4 mln €)
WHAT WE DO - BEST PRACTICES

11. Socially Responsible Investment Funds
Etica Sgr is the asset management company (3,5 bln assets managed) of Banca
Etica. It's leader in the SRI Italian market and the only one that places only ethical
investment funds, which invest exclusively in listed securities of States and companies
characterized by a high profile of social and environmental responsibility.
WHAT WE DO - BEST PRACTICES

12. OUR PARTNERS IN THE WORLD
Febea – European Federation of Ethical and Alternative Banks (30 bln € loans )
Gabv – Global Alliance for banking on values (110 bln € loans)
EMN + MFC - Microfinance institutions global networks (1.5 bln € loans)

13. OUR GLOBAL COMMITMENT
Through partnership with
strategic players of global
microfinance, 18 MLN €
reaching about 45.000
beneficiaries.

14. FIRST REPORT ON ETHICAL AND SUSTAINABLE FINANCE IN EUROPE
A comparative research between the key figures of European ethical
finance and the traditional banking system:
21 Ethical Banks VS 15 Global Systemically Important Banks
A deep difference
in the relationship
with the real
economy
Loans in % of total assets:
Ethical Banks 73,42%
Systemic Banks 38,53%
Deposits in % of total assets:
Ethical Banks 80,87%
Systemic Banks 42,15%
A UE ETHICAL BANKING OUTLOOK

15. Net equity in % of total assets:
Ethical Banks 11,22%
Systemic Banks 5,63%
The ROA (Return on Assets) of 2006-2016 period has been lower in the traditional
banks. Moreover it shows the resilience of ethical banks to crisis periods:
ETHICAL BANKS ARE STRONGER...

16. The ROE (Return on Equity) indicates the higher average profitability of the
traditional system but at the price of a very high volatility (5 times more than
ethical banks).
Growth trends 2006-2016 shows that Ethical Banks have grown much more
than European Systemic Banks.
...MORE STABLE (AND RESILIENT)...

17. ...AND BANCA ETICA MORE THAN THE OTHERS
Growth in assets,
loans, net capital,
net income in the
last 5 years.
Banca Etica has
generally grown
more than the
average of
European ethical
banks, in particular
as regards the
growth in deposits
and net equity.

18. SOME PROPOSALS TO POLICY MAKERS
There are some “easy” ways to accelerate our social impact:
• Support socially oriented Banking capital requirements tailored to our
low portfolio risk and high social impact (BE default ratio at 0.88% - up. 31.12.2017).
• Supporting the loan activity reinforcing public guarantee programmes (eg. the
UE EASI measure managed by EIF) through portfolio guarantees and quasi
equity instruments.
• Diversification of the financial system
values based/socially oriented
Banks and Mfis are different:
acknowledge the difference. (See law n.
232/2016 approved by the Italian Parliament
on dec.7° 2016).

19. Ethical banks, and BANCA ETICA among them, are already promoting economic
progress and security through innovation, human capital development, and
good corporate governance. They have a great potential. Let’s partner, private
and public bodies, to help ethical finance grow in an effective and efficient way.

20. www.bancaetica.it
@bancaetica
www.facebook.com/bancaetica
www.youtube.com/bancapopolareetica
thanks!