When it comes to sustainability, Triodos sets the tone. Almost all banks are now working on a more sustainable profile; Triodos was founded forty years ago especially for sustainable banking. How different it is with regard to the other trend among banks: downsizing and downsizing. While all banks have already made significant cuts in their costs and personnel in recent years, Triodos has been quiet in that area for a long time. The bank – and its customers – seemed to be satisfied with high costs.
See you this Tuesday. The bank announced 130 to 150 jobs in the coming years, equivalent to almost a tenth of the current workforce. The move is the bank’s first major reorganization since its inception in 1980. Tens of thousands of jobs have already been cut at the other, much larger banks since the financial crisis in 2008/2009.
80 percent cost
Triodos wants to ultimately save 11 to 12 million euros per year in costs with the reorganization, which the bank now spends 200 to 275 million euros per year.
Triodos had lost about 80 cents for one euro in earnings for years. That cost-to-income ratio, as it is called in the banking industry, is very high compared to that of other banks. For example, the expense ratio at de Volksbank, owner of Triodos competitor ASN, has been 67 percent on average over the past five years.
The three largest banks in the Netherlands, ING, Rabobank and ABN Amro, had a ratio of 60.5, 63.8 and 76.4 percent respectively last year. At ABN Amro, this ratio was extra high in 2021 because the bank has again cut the number of jobs (and a reorganization costs money).
With the savings announced now, Triodos wants to reduce the cost ratio to 70 to 75 percent. The bank expects to lose 6 million euros on the restructuring. The board still has to talk to the trade unions and the works council for a precise interpretation of a social plan.
Also read: ING closes half of offices and cuts 440 jobs
Five countries, five banks
Triodos has largely already figured out where it can be done more efficiently. The bank has branches in the Netherlands, Belgium, the United Kingdom, Spain and Germany. These branches are in fact five complete banks: they have their own communication and personnel department and they independently arrange customer screening. These functions will have to be merged in the coming years, as has already happened with internal supervision.
That does not mean that everything goes to the head office on the De Reehorst estate in Zeist, a spokesperson emphasizes. “With all the digital possibilities that are available today, we are going to see in which country and who can best perform which function. This is how international, digital teams are created.”
According to the spokesperson, the higher efficiency and lower costs benefit all ‘stakeholders’ of the bank: employees, customers and certificate holders. Triodos is one of the more expensive institutions to bank with. A bank account costs 60 euros per year, and a savings account 24. This makes it the only bank that charges money for savings (while no interest is charged on balances below a hundred thousand).
According to the spokesperson, the employees will also benefit – despite the layoffs – because it is simply not nice to work ‘inefficiently’.
Dissatisfaction among certificate holders
However, it is probably mainly the bank’s 45,000 depository receipt holders who crave ‘good’ news. Triodos has been using the depositary receipts (non-controlling shares) for 40 years to raise equity capital. Holders of these were dealt a major blow last December, when the bank announced that the certificates are likely to lose 30 to 45 percent of their value. Until the corona crisis, the bank guaranteed the price, because it bought back the certificates itself if a holder wanted to get rid of them. However, during the first months of the corona pandemic, too many people wanted to get rid of their certificate at the same time. Now there must be a public trading platform, where buyers and sellers determine the price together.
The decision led to great dissatisfaction among depositary receipt holders. They have been unable to access their funds since March 2020, and fears are that the loss on their investment will exceed the s forecast of 45 percent once the public platform opens.