Our response to the financial crisis
2 October 2008 - Triodos Bank's CEO, Peter Blom, explains how the sustainable bank remains buoyant despite the international banking crisis.
"Triodos Bank is a fully independent bank and a pioneer of sustainable and transparent banking. Our mission is to make money work for positive social, environmental and cultural change. Triodos Bank is a solid bank, both in terms of our ethical approach to finance and also by widely recognised objective criteria. The strength of a bank can be determined by three key indicators: solvency, liquidity and the quality of assets. When all three are applied to Triodos Bank, they show there's no doubt that we are a healthy bank, able to serve our customers properly and well prepared for growth.
"For Triodos Bank, banking has always been a matter of trust, transparency and a long-term relationship with our savers and borrowers. A bank is responsible for the money entrusted to it by its depositors. By lending to businesses and projects that are sustainable financially, as well as socially and environmentally, we balance a positive impact with a healthy financial return.
"A bank is, or should be, an organisation that brings two groups of people together - depositors and borrowers, people who have money to spare and people who need it. A bank adds its knowledge and expertise. If you move away from that basic principle, and allow the pressure for ever increasing profits and bonuses to force you into an abstract world of derivatives and structured products, you lose sight of what is virtual and what is real. That is what happened in mainstream banking. And it's the exact opposite of what Triodos Bank stands for."
Strong Solvency
Solvency represents a bank's long-term ability to meet its financial obligations, reflected by the strength of its capital base. Triodos Bank's solvency is very strong, with a regulatory capital ratio of 15.1%, well above the required minimum of 8%.
Good Liquidity
Liquidity represents a bank's ability to access sufficient funding to meet its financial obligations toward its customers. Triodos Bank's funding is very strong and stable as it is based on widely-spread savings and deposits from over 150,000 customers. Because of this, Triodos Bank has no need to borrow from other banks, leaving Triodos independent from volatile capital markets. Triodos Bank's liquidity position is very healthy, as only 65% of its funding is invested in loans, with the balance kept available for liquidity.
Solid Assets
The quality of assets such as the loans and investments made by a bank is the third important indicator. Since its foundation in 1980, Triodos Bank has consistently invested directly in projects and businesses, while establishing a close relation with the people and understanding their underlying activities. By doing this Triodos Bank has built a high quality loan book with a very good track record. Triodos Bank has never invested in structured products, such as mortgage or other asset backed securities, or complex financial constructions based on derivatives. Triodos Bank has always considered those products too abstract and far away from the real economy and the Triodos Bank's mission.
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