According to CEO Jeroen Rijpkema, a collective claim against Triodos is “not in the interest of depository receipt holders”. First of all, because banks function best with peace and confidence. But at least as important: “If people demand compensation from the bank, it must be paid by all depositary receipt holders together. The capital of the bank belongs to them.”
Rijpkema thus responded to the announcement on Wednesday that two claim organizations are preparing a case against Triodos. Six hundred lenders have joined one, Triodos Tragedie. At the other, Red Triodos, there are about three hundred. The latter foundation is led by Pieter Lakeman, who heralded the fall of that bank in 2009 with his appeal to withdraw money from DSB.
According to CEO Rijpkema, Triodos has not yet received a claim, he said on Thursday in the explanation of his bank’s half-year figures (2022: 375 million euros in turnover, 1,800 employees). “But if that happens, you are talking about lengthy processes. We are convinced that it is better to stand together around the bank and look to the future. But: everyone is free to make their own choices.”
Corona pandemic
The dissatisfaction revolves around the capital that more than 43,000 parties have invested in Triodos since the bank was founded in 1980: more than 1.2 billion euros. In return, they received a certificate. In doing so, they did not acquire voting rights, as with shares, but they do benefit from Triodos’ performance: they receive dividends, and the value of the certificate grows along with the bank. They can only buy and sell the certificates from and to the bank itself.
This became a problem when the corona pandemic broke out and an above-average number of certificate holders wanted to convert their shares back into cash. Triodos could not handle such a wave of sellers. There were not enough new buyers and the bank is only allowed to purchase a limited amount of its own certificates due to regulations.
For the sustainable bank, the oversupply was reason to close the trading system overnight in March 2020. As a result, the holders of depositary receipts, mostly private individuals, could not access their deposits. Not even when the value fell in one fell swoop because Triodos had to put a current price on the pieces due to accounting rules, which was downgraded to 59 euros at the end of 2021 due to poor marketability.
To accommodate depositary receipt holders and to facilitate trading, Triodos decided to move the buying and selling of the shares to a semi-public platform: Captin. There, lenders would be able to trade their certificates every Wednesday, with no limit. That had consequences for the price, Triodos warned at the time. The value of a certificate was no longer linked to the value of the bank, but was now determined by supply and demand.
Read also: Reopened Triodos certificate trading does not bring peace. On the contrary
This summer, trading resumed after a break of more than three years. It was a disappointment for certificate holders. There was plenty of supply, there were hardly any interested buyers. On the first day, a piece was sold for 50 euros, on the lowest point for 22.50 euros. Before the pandemic broke out, Triodos still paid 84 euros.
balance
In Spain, the consternation surrounding the certificates led to 332 lawsuits, Triodos now states in its half-year figures. The court has already ruled in 50 cases: 23 times Triodos was right, the other times the depositary receipt holder. But things are not settled, in almost all cases the loser appealed.
Rijpkema can imagine that the low trading prices make certificate holders ‘uncertain’, he says. But on a new platform, he says, trading also needs time to start. “We are confident that this is the way to restore certificate tradability, but it will take some time to balance price and volume.
The CEO points out that at almost every bank you see a difference between the intrinsic value and the value that is determined on a trading platform. “That is currently the valuation for the financial sector. We have always been clear that this is a consequence of the new system. Perhaps that valuation will be higher over time, but I cannot predict that.”
According to Rijpkema, Triodos can do two things until then to improve trade: ensure that the new platform functions, and ensure that Triodos is attractive to invest in. After seven trading rounds, he believes that this has been successful. “We see that the system works.” Five hundred new investors have also joined Triodos via the new platform.
At the same time, the bank presented significantly improved results on Thursday. Triodos, for example, helped by the higher interest rates, ended the first half of the year with a turnover of 230 million euros, almost a third more than a year earlier. Profits rose even more, by almost 90 percent to more than 35 million euros.
This is “good news” for the certificate holders, says Rijpkema. Because they receive half of the net profit, they receive a dividend of 1.23 euros per depositary receipt. Triodos has already paid out EUR 4.35 in dividend over the past twelve months. Whether that good news leads to more interest in the certificates will only become clear in a few days. Trading will open again on Wednesday.