Updated study reveals significant differences between the financial performance of ‘too-big-to-fail’ banks and sustainable banks
An updated study comparing key financial information about the world’s biggest banks, or Global Systemically Important Financial Institutions (GSIFIs), and a group of leading sustainable banks has shown significant differences.
The results strengthen the case for a more diverse, transparent and sustainable banking system in the future.
The results show:
- Sustainable banks lend almost twice as much of their assets on their balance sheet, when compared with the big banks (75.9% compared to 40.1%, from 2003 to 2012)
- Sustainable banks rely on customer deposits to a much greater degree to fund their balance sheets (73.1% to 42.9%)
- Sustainable banks maintained stronger capital positions, relative to their larger contemporary banks, especially when measured by equity/total assets (7.2% to 5.5%)
Speaking at ‘A Better Future for Finance’, a special event at Georgetown University, Global Alliance for Banking on Values (GABV) Chair, Peter Blom, said the results show that sustainable banks lend more proportionally than the ‘too big to fail’ banks, benefit from funding that’s primarily drawn from customer deposits, and have a stronger capital base.
“We cannot afford to ignore the increasingly compelling business case for sustainable banking. It’s now clear that over the long-term values-based banks, that put people and the planet they depend on first, have proved to be more robust and resilient than the world’s biggest banks.
“The results matter because we need a stronger banking system to support a more resilient, modern economy. And we need it soon, so finance can play its role in helping to meet urgent and converging social, environmental and economic challenges. If we take the mounting evidence seriously, we have an unprecedented opportunity to build a more diverse, transparent and sustainable banking system in the interests of us all.”
The research was extended to include a comparison of the European banking market, with similar conclusions to the overall report. Sustainable banks in Europe showed higher levels of lending to the real economy, compared to GSIFIs, stronger levels of equity capital, and better returns on assets.
Leading CEOs from the Global Alliance of Banking on Values (GABV), including Tamara Vrooman, President and CEO of Canada’s largest community credit union, David Reiling, CEO of Minnesota’s Sunrise Banks, and John Fullerton, Founder and Director of the Capital Institute, a collaborative working to transform finance to serve a fairer more sustainable economic system, used the Georgetown University event to describe what a banking landscape made up of banks that balance people, planet and prosperity would look like. For details, including a web stream of the event, and Twitter Chat, visit http://www.gabv.org/events/a-better-future-for-finance-10-october-2013.
The GABV is an independent and growing network of 25 of the world’s pioneering sustainable banks, from Asia, Africa, North and South America, Europe and Australia. The network’s members have combined assets of over $70 billion, serving millions of customers around the world.
For a download of the complete study and more information on the GABV, visit www.gabv.org
The Global Alliance for Banking on Values (GABV) is a membership organisation, made up of 25 of the world's leading sustainable banks, from Asia, Latin America, Australia and Africa, to the US, Canada and Europe. Members believe that we must improve the quality of life for everyone on the planet, recognizing that we are economically interdependent and responsible to current and future generations. Across the world, GABV members provide the money entrepreneurs and their enterprises need to transform lives and deliver sustainable development for unserved people, communities and the environment.
The organisation began when ten of the world’s banks came together in 2009 to commit to supporting the growth of sustainable banking and its impact worldwide. GABV banks have combined assets of over $70 billion. In 2010, Global Alliance for Banking on Values pledged to touch the lives of a billion people by 2020 by expanding its network of banks, further increasing the capital it raises and training a new generation of sustainable bankers to use that money to make a lasting difference, and help meet the biggest challenges of our time.
To qualify for membership, each institution must: be an independent and licensed bank or financial institution with a focus on retail customers; have a minimum balance sheet of $50 million; and be committed to responsible financing and the triple bottom line of people, planet and prosperity. Members are bound by a shared commitment to find global solutions to international problems, and to promote a positive, viable alternative to the current financial system and mainstream banking business models.
The members of the GABV are:
Affinity Credit Union (Canada), Alternative Bank Schweiz (Switzerland), Assiniboine Credit Union (Canada), Banca Etica (Italy), Banco Fie (Bolivia), (BancoSol (Bolivia), bankmecu (Australia), BRAC Bank (Bangladesh), Centenary Bank (Uganda), Clean Energy Development Bank (Nepal), Credit Cooperatif (France), Cultura Bank (Norway), Ecology Building Society (UK), First Green Bank (US), GLS Bank (Germany), SAC Apoyo Integral (El Salvador), Merkur Cooperative Bank (Denmark), Mibanco (Peru), New Resource Bank (US), OnePacificCoast Bank (US), Sunrise Community Banks (US), Triodos Bank (Netherlands), Vancity Credit Union (Canada), Vision Banco (Paraguay), XacBank (Mongolia).