Where do banks invest their depositors' money? Whose interests do they serve, and what criteria do they apply? Increasing numbers of dissatisfied customers want to know what happens to their money, and are opting for alternative financial services which are growing in spite of the economic crisis choking Spain.
"As soon as a loan is approved, it is posted on our website," Ernesto Juárez, a member of the local FIARE group in the southern city of Málaga, told IPS. Transparency is a core feature of this ethical banking project, presently operating in Spain as an agency of the Italian credit cooperative Banca Popolare Ética (BPE).
With 2,618 members and capital equivalent to 3.4 million dollars, FIARE finances organisations with development aid, social inclusion or agroecology projects that have been affected by spending cuts or delays in public or private support, said Juárez, who added that the total value of loans increased by 40 percent between 2010 and 2011.
"Financially, we are very stable. We do not lend more than we have," said Juárez. The organisation provides "responsible" savings and investment plans, in contrast to the commercial and savings banks that have exacerbated the crisis with their obsession with speculating and maximising profit, he said.
Between 64 and 77 billion dollars of capital is needed to rescue the Spanish banking sector, rocked by the bursting of the real estate bubble in 2008, two foreign auditing firms commissioned by the government reported Thursday Jun. 21.
On Jun. 9 the EU approved a credit line of 127 billion dollars for the government of rightwing Prime Minister Mariano Rajoy to bail out the banks; once the actual amount needed is determined, the government must formally request the rescue package and accept its terms.
Meanwhile, the people of Spain are fed up with the drastic spending cuts in health, education, social protection and public services aimed at reducing the fiscal deficit to the levels insisted on by the EU and paying down the public debt.
On May 9 the government announced the nationalisation of Bankia, the country's fourth-largest bank, and the eighth financial institution taken over by the state since the crisis began in 2008. Bankia was the bank most exposed to toxic assets arising from the property market crash.
Spain is struggling with a 24.3 percent unemployment rate that has resulted in more than five million people out of work, and is suffering the worst cutbacks since democracy was established in 1977.
"In the present circumstances, people reflect more about economic and financial matters, and many people opt for ethical banking," sources at the Triodos Bank, a leading European ethical bank with "good liquidity, that invests in sustainable sectors of the real economy," told IPS.
The Triodos Bank operates in The Netherlands, Belgium, Germany, the United Kingdom and, since September 2004, Spain, where it has over 80,000 customers, 12 offices and 150 employees.
In 2011, in spite of the credit squeeze in traditional banking due to the financial crisis, the Triodos Bank's net profits grew by 51 percent and it awarded 33 percent more in loans to organisations working in sectors like agroecology, culture, social inclusion and the elderly.
"Our customers are people who want to see transparent and responsible investment and who want to know how their money is being used; we also have as members businesses and associations committed to environmental, social and cultural goals," they said.
In ethical banking, applications for loans are evaluated differently than in commercial banks. For instance, at FIARE an ethical-social evaluation committee examines prospective investments and loans to ensure that they are compatible with the principles of viability, sustainability, and respect for the environment and labour rights.
Juárez announced plans for a merger of FIARE with BPE next year, which would transform FIARE into a powerful credit cooperative, offering conventional banking services and products. BPE has 47.7 million euros of social capital, and 36,898 members.
"The idea is not to grow at a fast rate, but to take root in the regions," Juárez said. The important thing is the establishment of the project through consolidation of networks and involvement of social groups and individuals who will contribute to its development in different communities, he said. At present FIARE has 10 associations based in different regions.
Ethical banking is an alternative for "many people who are disillusioned with traditional banking," particularly because of the enormous sums paid in bank bailouts and the astronomical salaries of their executives, said Óscar García Jurado, the technical secretary of COOP57 Andalusia, which belongs to the COOP57 financial services cooperative.
García Jurado told IPS about their campaign on the theme of "Put your money where your ideas are," and said the cooperative uses its funds to provide resources to organisations carrying out social and economic projects that foment employment, the formation of associations and sustainability.
"I always found it worrying that a bank could use my savings to invest in companies that were anathema to my principles, such as weapons manufacturers," Pilar Iglesias, a retired teacher, told IPS.
Iglesias put her savings into ethical banking so that "they would finance projects compatible with a sustainable model of human development, with a gender perspective – the only model that will help build a balanced economy centred on people and their needs."
COOP57, a FIARE partner, was founded in 1996 and has 407 participant groups that are social entities, such as cooperatives, social movements and foundations, and 1,707 individual associate members. It finances 170 projects with a total value of 8.7 million dollars and manages deposits worth 13.7 million dollars.
Apart from the contributions of its participant groups, the cooperative receives resources from its associate members, who are "people who want their savings to be managed in accordance with their ethical and social concerns." In 2012, their deposits are earning two percent annual interest, according to the Coop57 web page.
García Jurado acknowledged the major impetus given to ethical banking by the 15M "indignados" or "outraged" movement, which emerged from protests on May 15, 2011 in Spain, which is demanding more participative democracy and a different social and economic model under the slogan "We are not merchandise in the hands of politicians and bankers."
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