Princess Máxima had nothing good to say about her former colleagues, bankers who have plunged the world into a deep financial crisis. At a meeting organised by Triodos Bank in the Dutch town of Zeist, Máxima said on Tuesday that bankers had lost sight of the core values of their profession. With "overzealous marketing" practices they sold inappropriate loans to vulnerable consumers who did not know what they were getting into. The financial crisis was due in part to these kinds of practices. "Only now we are starting to have some insight in the real extent of the consequences of the last months," the princess said.
Before Máxima met crown prince Willem Alexander ten years ago, she worked as a commercial banker in New York for banks such as Deutsche Bank and HSBC. Máxima gave her talk on Tuesday to mark the founding of the Global Alliance for Banking on Values, an alliance of twelve financial institutions focused on social banking and microfinance, including Triodos Bank.
Microfinance
Over the past three years Máxima has served on a UN advisory group for microfinance: the issuing of loans to poor people or starting entrepreneurs in developing countries. The essence of banking, says Máxima, consists of trust, building long-term relationships and offering financial products that have added value. "Neglecting these values seems to be at the heart of the causes of the crisis."
She appealed to governments to set up a "'light touch' but adequate system of market regulation" and to offer consumers financial education, so that they can better understand the financial products they are offered. "It is the role of banks and microfinance institutions to have consumer protection and transparency written into the DNA of their organisation," Máxima said.
Responsible
She ended her talk with a call on banks to go "back to basics". "Back to the traditional banking activity of acting as an intermediary between the saver and the borrower, back to a strong relationship between the customers and the financial institution that serves them, and back to a thorough assessment of how much a customer can really handle as a loan." These basics have been absent the last few years, Máxima said. She voiced her support for the new alliance of socially responsible banks.
Peer Blom, chairman of the board of Triodos Bank, said that the collaboration of social banks aims to offer an alternative to the banking model that has fallen into discredit. "Social banking is not only an idealistic alternative, it is also a healthy business model," Blom said.
Triodos hopes the cooperation with the eleven other banks from Europe, Asia, Africa and North and South America can exert a stronger social influence than each bank on its own and set an example for successful banking.
The model of social banking distinguishes itself from conventional banking by not being led by shareholder value, not espousing a bonus culture, and not getting involved with structured financial products. The twelve participating banks showed on average 24 percent growth per year over the past years.
