By Ivan Szekeres, Project Developer in Green Energy Cooperative and Vanesa Vujanić, Attorney-at-Law and Partner at Vujanić Law Office
From June 5 to June 7, the beautiful Croatian town of Split will host the general assembly of FEBEA – European Federation of Alternative and Ethical Banks. This event comes as a consequence of two years of extraordinary effort of a group of professionals to establish the first ethical bank in Croatia. Its registration with the Croatian National Bank is set to occur in the course of June.
The term ‘ethical banking’ may not immediately be recognized in the Balkans. Nevertheless, FEBEA exists 15 years and its banks currently manage about EUR 40 billion worth of assets. The umbrella gathers seven ethical banks: Crédit Coopératif (France), Caisse Solidaire du Nord Pas-de-Calais (France), Crédal (Belgium), Hefboom (Belgium), Banca Etica (Italy), TISE (Poland) and La Nef (France).
Although the banking business in the beginnings of it establishment included a strong social element, it has started losing its original ethical features since the 1930s. This has made necessary the birth (through a bottom-up process) of a new generation of social banks, the so-called ethical banks. They have the objective of achieving a positive impact on the collection and use of money. They invest in new activities such as renewable energy, organic farming, small and medium-size enterprises, non-profit sector… They respond more and more to the needs of those who are excluded from the regular banking system, and to the needs of savers and investors who are increasingly interested in the way their savings are used. The new direction in the banking business (again) becomes an instrument of development for new social and environmental initiatives.
The ethical bank in Croatia, when founded, will become an ethical development bank which will be owned entirely by its own clients. Instead of high profits, its primary goals will aim to contribute to a better society and the wellbeing of its co-owners. According to the COF’s representatives, the bank’s way of business doing plans to incorporate the following principles:
- People are more important than profit – an ethical bank is a development bank characterized by long-term thinking and an individual approach. It only invests in projects that, along with being financially viable, have a positive impact on society and the environment
- The loans are with no currency – made in Croatia, by supporting the country’s local economy, it helps increase the value of the local currency. All approved loans are planned to be in the same currency as the investor’s income. Interest rates are planned to be set under 4%.
- Transparency – all the bank’s services are transparent and come with no hidden expenses – members have a right to know what the bank does with their money. In order to maintain member trust, all important decisions related to the bank’s activities will be publicly available.
- No additional fees – the bank plans to provide all standard banking services, but with no additional fees such as account service charges, domestic transaction fees, charges related to online and mobile banking or debit cards.
- Democratic management – the bank shall have no secret or hidden investors or owners and is owned in its entirety by the Cooperative for Ethical Financing (COF). Each member will have the right to participate in management on a ‘one member – one vote’ basis, regardless of when they joined COF or the bank or of the value of their deposit. All strategic decision-making activities will be easily accessible through an electronic interface from the comfort of the client’s own home.
All projects deemed financially viable and beneficial to society and the environment will be entitled to apply for funding. Additionally, the bank plans in assisting its members in preparing all the necessary project documentation for European Union’s funding programmes. Projects in the following categories form the basis of the bank’s investment policy:
- Renewable energy
- Agriculture, particularly sustainable agriculture,
- Small and medium enterprises in manufacturing processing and professional services,
- ICT sector and new technologies,
- Social entrepreneurship
- Startup business.
The bank will be registered and organized as a joint stock company, with the only owner being COF, established with the sole purpose to create prerequisites for the establishment of the first ethical bank in Croatia. The bank owner interests will be represented by COF’s manager.
Cooperatives are, under Croatian law, regulated by the Croatian Cooperative Act and Commercial Companies Act. They are voluntary, open, individual and independent entity managed by its members who, by contributing their own work or by using the cooperative’s services (based on mutual assistance) realize, improve and protect their own individual and common economic, social, educational, cultural and other needs and interests, and achieve goals for which the cooperative has been established. Its main principles are voluntary and open membership, democratic governance by its members, righteous division of profit, autonomy and independence. A member of the cooperative can only be a person or entity which directly participates in the work of cooperative, does business through the cooperative and uses its services, or in another way directly participates in the realization of goals for which it has been founded.
In order to become a member of COF and thus a co-owner of the ethical bank, a private or legal person must:\
- Complete the application form which can be found on the bank website: eu;
- Accept COF’s Rules and Principles of ethical banking and social entrepreneurship;
- Make the payment of the basic cooperative share quota in the amount of HRK 2.500 (EUR 334);
- In case of legal entities, make the payment of an additional cooperative share quota which has a minimum amount stipulated and it depends on the type of the legal person.
For more information on the first ethical bank in Croatia and COF, please visit Ebanka.eu and Zef.hr or contact: