NewB : the scam in a sarouel-cravate ?

By Emmanuel Wathelet, Chair of the Master’s Degree in Media Literacy at IHECS, author of the blog

Our objective at Kairos has obviously never been to make those who read us lose hope, but it has also never been to give them illusions, because such an end would justify certain means and would certainly lead to the silencing of inconvenient truths or realities. Our primary goal is not to hide the truth from our readers. It happens that this will to say everything gives rise to disappointments, the loss of excessive hopes that some still placed in one or the other alternative. We are sorry, but we are not here to say what some people want to hear. The article that Emmanuel Wathelet proposed to share with us on the Kairos website will anger some, make some disappointed, confirm the positions of others, or convince them of what they assumed. Whatever the case, on the eve of the General Assembly in New B, it can only provoke debate, which is sorely lacking in our societies.

10 news developed in this file

  1. NewB’s management is lining its pockets: 9400€ monthly salary
  2. The financial situation of NewB is catastrophic, millions of losses in one year
  3. A NewB share at 20€ is actually worth 2.27€ today, almost ten times less!
  4. Derivatives, SICAV, NewB is far from being just a deposit bank
  5. NewB finances the manufacture and trade of arms
  6. In nine years, NewB has not generated any profit, even with the sale of its insurance
  7. The new CEO was a director of a bank convicted in 2016, during his tenure, of overly risky management
  8. NewB is prepared to change its principles if its activities require it
  9. NewB’s ethical standards are the same as those of AXA, BNP, HSBC, etc.
  10. NewB is not financially able to fund innovative projects
For good? Really?

This article is the result of an intense work of investigation, analysis and crossing of sources. I realize that his reading is demanding. It calls upon concepts from finance, which I myself had difficulty in grasping. I really hope you manage to hang on; you have to go through this to understand the problematic nature of NewB, which perhaps also takes advantage of the complexity of these issues to protect itself.

Despite constant attention and verification efforts, errors may remain. If this is the case, please feel free to point it out in the comments with an evidentiary source and I will modify accordingly. The illustrations are satire, not information.

« Let’s change the bank for good » they say.

Many of you have believed in it, invested time, energy, money and passion. A year ago, NewB was everywhere, on social networks, in the media, on the street, from stickers to billboards…but, above all, on everyone’s lips.

For my part, I had decided to publish at that time an article,  » NewB, the ambulance and the Trojan horse « , to denounce an initiative that seemed attractive in the speech but misleading in the facts and its objectives. I then tried to show why it couldn’t work. I’ve been criticized a lot: NewB was necessarily better than nothing.

A year has passed. And, one year after the fundraising that saw NewB « receive » a windfall of more than 35,000,000€ to replenish its equity and obtain its banking license, it is time to take stock. Did I make a mistake? This is what I propose you to see with me today, allowing you also to prepare yourself to NewB’s extraordinary general meeting to be held in a few days, this Saturday, November 21, 2020.

High expectations, high concerns

Let’s be clear, we had high expectations: what would responsible investments be for NewB? What credits, for what and to whom would they be granted? What is the current financial health of the young bank? Is it viable in the medium and long term? We were also very worried: a year ago, at the time of the fund raising, the share of NewB that you bought at 20€ was already worth only 5,95€(see the prospectus, p.12, paragraph 3.3.4). It’s like agreeing to pay 20€ for a pair of shoes that you know are only worth 6€. And what about today? Given the new losses for 2019? According to the audited accounts as at 31/12/2019, a B share sold at a nominal value of EUR 20 was actually worth EUR 2.27(1), which is still less than half the value of EUR 5.95 published in the issue prospectus.

The good news is that as there is, at the time of writing, no notarized deed,  no notarized deed yet on the translation of the last fund raising into capital for the moment, it is as if you had only lent to NewB and you could get your money back (even if this is hypothetical according to article 10bis of the statutes). Finally, is this really good news? Why does the famous 35,000,000€ entrusted by the cooperators — that is to say you — not yet count as capital? Is there a problem somewhere that has been hidden from you?

In any case, when the debt is transformed into capital, your shares will be blocked for a minimum of three years(go read the statutes). After these three years, you will still not be able to get your shares back, if NewB considers that this would put it in financial difficulty — and given the current state of the accounts, while hope is certainly alive, it is still irrational. Finally, you should know that it is forbidden to make a capital gain on your shares but, given the financial situation, it is almost certain that, in the unlikely event that you were allowed to leave, you would lose: the intrinsic value of the latter (= the amount withdrawn) would be below the nominal value (= the amount at which you bought them), as explained above.

It was also known that NewB had already been working with major capitalist players such as Rabobank, Deloitte and Mastercard — which is not good news for an institution whose explicit objective is to « change banking ». Has NewB learned its lesson or has it decided, despite its grand speeches on transparency and ethics, to persist in its indecency? I’ll answer it below and, unfortunately, it might be particularly confusing.

NewB today: focus on the annual accounts

1. Huge structural losses

Let’s say it outright: NewB’s financial situation is catastrophic. Between fiscal 2018 and fiscal 2019, the company’s value melted like snow in the sun, having lost 70% of its value in one year (from 5,719,733€ of equity to only 1,736,625€). The losses for the year 2019 alone amount to 4.008.746€ and those accumulated over the years to 13.547.515€. This is despite the sale of insurance policies that are supposed to contribute to NewB’s profits. It will be better in 2020? Not at all. The 2020 budget anticipates an even greater loss, in the order of €6.5 million.

It is worth noting that the annual accounts, despite the imperative of transparency that NewB has set for itself (at least in its charter and its speeches), do not present the details, for example, of the turnover. It is therefore impossible to know what income these famous insurance activities, « borrowed » from the « three » Monceau Assurances cooperators, have generated (to understand this other trick, see my previous article).

People will tell me: « Yes, but this is a young company, a start-up, these are not losses, these are investments! « . Far be it from me to deny the difficulty of creating a new bank, especially in a context where we are witnessing their mergers and disappearances (perhaps we should have asked ourselves why…), but continuing to rely on the idea that NewB is « young » when the project was launched nine years ago is starting to show. On the other hand, a start-up can afford to be several years in the red if it is recognized as innovative and if we are able to anticipate a capacity to generate profits later on. We will see that in the case of NewB, we are very, very far from it. For the time being, an examination of NewB’s nine annual accounts from 2011 to 2019 indicates that it has never, since its creation, been able to generate a single € of profit.

Of course, some of the losses are to be attributed to costs related to the capital increase (including, presumably, the advertising costs which I had already raised the aberration for a project like NewB defending values of sobriety and sustainability) while the recapitalization, without the banking license, could not yet be translated into equity. However, most of the losses concern items that are independent of the recapitalization and that have structurally weighed down NewB’s accounts since its creation:  a very negative gross margin (-2,482,011€, showing an inability to generate profits) and…remuneration.

2. Indecent salaries for the Management Committee

Indeed, if the financial situation, as we said, is catastrophic, it does not prevent the management committee from lining their pockets. Let’s take the time to investigate because in the charter, in the annual report or in the accounts published at the National Bank, everything is done to make it very difficult to know the salary of the NewB management committee.

After analysis, we understand that there are three executive directors, three white men (the NewB version of diversity), who are therefore also employed by the cooperative: CEO Tom Olinger (ex-Crelan, ex-Crédit Agricole, ex-Deutsche Bank), CFO Jean-Christophe Vanhuysse (ex-Crédit Mutuel, he also spent 15 years at BKPC where he was CFO), and CRO in charge of risk Frans Vandekerckhove (ex-ABN/AMRO, ex-PWC). These are profiles that have absolutely nothing « alternative » about them. To ask them to change the bank is naive or hypocritical.

As a result, it is less surprising that the remuneration of these three directors alone represents almost 40% of the company’s total remuneration (see table below), which NewB calls a « sober and controlled remuneration policy » (p.70 of 79 — yes, you have to read the whole thing to the end to see the most despicable part). Thus the directors each get by with an average monthly salary of 9418€.

9418€ per month? An MP’s salary! Is this the social economy?

Under the guise of a « 1 to 5 maximum » salary pressure, this is really what unions, universities and associations such as SOS faim, Caritas, CNCD, Oxfam, CADTM or ATD quart-monde and the Walloon Anti-Poverty Network ?

The non-executive directors, whose work is supposed to be « free », pocket attendance fees of up to 500€ per board meeting for a cost of 30,000€ for the year 2019. I should also think about applying for these mandates, it would be more rational than spending my time voluntarily going through these depressing accounts (being paid only for « likes » or « dislikes », depending on the situation).

Compensation for NewB employees
Remuneration item = 912057€.
Remuneration of non-executive directors = 30000€.
Remuneration of the management committee = 339061€.
Annual remuneration for each member of the management committee = 113020€.
Monthly remuneration for each member of the management committee = €9418
Remainder for 10.1 FTE = 542996€.
Proportion of Executive Committee compensation to total FTEs = 37%.
Average annual salary excluding management committee = 53761€.
Average monthly salary excluding the management committee = 4480€, of which we obviously do not know the breakdown between employees.

However, it is the remunerations that — as the annual profit and loss accounts show — directly increase the losses, causing the intrinsic value of NewB shares to plummet. To put it another way: the management committee is gorging itself with the money of the little cooperators who will probably never get their money back . As clear as that. And in the meantime, the little ones have given, given and the ASBLs have given, given.

What a shame.

But that’s not all. One would think that obtaining the banking license and thus the recognition of being able to become a real bank, after nine years of hard struggle, would be a huge success for the management committee, which would be keen to keep its « NewBaby » alive. Well, no. In March 2020, we learned that NewB’s CEO, Tom Olinger,  decided to jump ship . Maybe the 9418€ were not so attractive when you belong not to the social economy but to the indecent universe of the traditional bank and its opulent vulgarity.

3. A bank that no longer has anything « alternative » about it

Okay, but the new CEO will have been chosen for his values, right? For its adequacy with all that NewB advocates?

Missed again.

The prospective CEO, who has already taken office but whose appointment is to be voted on at Saturday’s AGM, has just inthe direct line of the private banking sector. Former director of Puilaetco Dewaay Private Bankers (I’ll come back to this), Thierry Smets also worked for Nagelmackers, KB Lux and Générale de Banque. He is also co-founder of Startalers, a platform  » by women (sic) for women  » which helps « women » to take their « financial future » into their own hands (it is not the woman, m’kay, and she has « particular life cycles […] ignored by traditional management », so well…).

And Puilaetco?

A great moment of anti-capitalism (irony, eh): you should know that Puilaetco had been  condemned for « too risky management in 2016, i.e. during the mandate of Thierry Smets — that must have given confidence to the board of NewB. Its main activity is thus wealth management without forgetting art investments, the kind of public that NewB is targeting (ironically, again…or not).

That’s for what concerns the news of NewB. However, you will have understood that the general assembly will submit to the votes a series of points which concern the future of NewB, a projection of which the synthesis in 79 pages is realized in a charter that I decided to analyze for you.

NewB tomorrow : the charter

The main characteristic of NewB’s communication is that it is deceptively performative: because it « says », we think it « does » or « will ». And it says a lot.

1. A « catalog » of unfeasible good ideas

Take a deep breath, because this is going to be a long sentence: we are promised that « the interests of the clients will take precedence over those of the bank and/or the staff » in terms of conflicts of interest (p.24), we are promised annual sustainability reports, a Societal Committee to guarantee NewB’s principles, a list (in reality non-existent) of indicators to ensure that these principles are respected, partnerships with interpreters for refugees, who will also benefit from services « that meet their specific needs » (p.32), socially oriented loans (with low interest rates, and therefore no profit for NewB) and a customer support service that is part of « a non-discriminatory and non-excludable policy » — a policy full of good intentions but unfortunately economically risky. NewB today simply cannot afford it.

Is that all? No, of course not. Next breath.

We are promised that NewB will not investigate your profile. Are you ill? Smoking? Do you take drugs? Careless driving? That’s fine, but again, she’s also increasing her risk by turning a blind eye. The communication will be transparent and sober, « limiting its recourse to paid advertising » and to « GAFAM » (p.26), as indeed the fundraising campaign and these last days with their advertising for insurance products have shown!

Even Immanuel Kant, philosopher of ethics, had his NewB pin.
(Attention, this is a misleading photomontage, Kant did not have for real, a NewB pin. But no doubt he would have been a cooperator).

NewB is also committed to obtaining and/or respecting the criteria of an impressive series of labels of all kinds: Anysurfer for inclusivity, SRI for socially responsible investment, « ecodynamic company » label, ESG criteria, Blue Angel label for its paper, FSC, Ecolabel, Nordic Swan, TCO, Energy Star, Fair Finance Guide, Financité and Fairfin, Ethibel, Febelfin’s « Towards Sustainability », Golf Standard, the SDGs and ODDs, UNEP FI principles and I am sure I am forgetting so many. As for the question of the legitimacy of these labels, of the realities they cover in reality (see for example my analysis of the Bcorp label in this article) and, above all, of their respect, we can still wait. It is simply grotesque and smells of green and socialwashing.

We are also promised a bank able to distance itself from the voracity of the free market because it « does not see itself as a competitor » (p.12) to other ethical financial institutions (oh no, it’s such a profitable market, there’s room for everyone, of course) and to have a « humane » credit collection policy, with a « right of review » over the organizations it should mandate (p.37). Moreover, NewB will only use suppliers who are themselves ethical (p.47) and to whom it will give a « score », like Carrefour’s yoghurt (we will see later that the concept of « ethical suppliers » is not respected).

We are promised « work groups » and « workshops » to inform, consult and even co-decide with the cooperators (but it is still NewB who « defines in advance who she wishes to see participate », p.10). The « co-creation » with associations is put in all the sauces, letting think that we will see NewB everywhere, as soon as we put a toe in an ASBL, which will have invested in a gizmo that it will then have to struggle to promote.

NewB even plans single-sex meetings to give people who have been discriminated against the opportunity to « bring up their analyses ». This is such hypocrisy. The experience of non-mixing is essential when the aim is political and, in particular, in militant environments. But what does this have to do with it? Is it possible to recuperate, to instrumentalize even more the lexicon and the practice of commitment to the sole benefit of its communication? As far as NewB is concerned, what is the sociology of these discriminated cooperators that it hopes to reach here?

Internal management will be horizontal (to be consistent with the remuneration of the Executive Committee, lol), and evaluation interviews will be « walking » to promote a « climate of equals ». I’m not kidding, it’s written on page 56. While considering of course that horizontality-is-better-than-hierarchy (yes, yes, that’s a link to my doctoral thesis that I’m discreetly placing there). Why? Because, it’s better, that’s all. This is also said in the film Après Demain by Cyril Dion. And it is an external operator who will help them (p.11), an operator who will have to be paid (with Sugus?).

Rare image of a CEO subjecting her N‑1 to a peer-to-peer evaluation interview.

These promises sometimes seem undesirable in principle and unpayable in practice. How, in such a budgetary context, to finance home visits for isolated clients, to process postal transfers supposed to compensate for the digital divide, to ensure a free SBB (Basic Banking Service), while allowing free pricing? In fact, as we will see in detail below, the solutions — when they exist — are in fact embodied in a dependence on the system and not in its questioning, such as sharing bank branches with other financial institutions, or renting cash dispensers (which will also cost NewB even though it does not expect to make a margin on these operations, see p. 32).

2. Sand grains in the beautiful mechanics

While this is an aspect that was strongly expected, this draft version of the charter does not provide any indicators to assess compliance with its own principles. Note 2 on p.3 clearly states that this will be done in a « later version ». Practical: the cooperators are asked to pronounce on the relevance and validity of principles that they will not have the means to ensure are respected.

Let’s say, for example, that NewB calls on Deloitte’s services again, as when making an application for « authorization as a credit institution » (see p.17 of the 2017 annual accounts), What scope will the Societal Committee have to be attentive to the respect of ethics? Will he be listened to when he tells his surprised administrators that, among Deloitte’s other clients, we find, for example, Morgan Stanley (a US investment bank), Microsoft, General Motors, Boeing or even Procter & Gamble, which, according to Amnesty, has distinguished itself in particular in child labor? What does NewB think of the fact that,  according to the CADTM that Deloitte is « crushed by condemnations », and that the same CADTM (not rancorous, it remains a cooperator of the « neobank ») was calling in 2016, a year before NewB brought in Deloitte, to « dispense with its advice »?

In addition, the Societal Committee is supposed to « periodically evaluate the relevance of [NewB’s ethical] principles to the evolution of the business » (p.4). Yes. In that sense. You would have liked to read that the Committee periodically assesses the relevance of the evolution of the activities in relation to the principles? I’ve been there too. But no. Here we have a wonderful article to gently and quietly slash through the catalog of NewB values. Will the changes have to be passed by the GA? Of course, but in the mode: « Well, anyway, it is already what we do so … « . This does not prevent you from trying, as I suggest at the end of the file with a series of questions to ask this Saturday.

How then can we see the « theme 13 » of the charter on the « ecological footprint of internal operations » as anything other than hypocrisy, where we talk about double-sided printing, recycling, waste sorting and train passes?

On the principle of cooperative and participatory governance, let’s remember this « innovation » that are the three colleges (depending on whether you are an institution that invests, an association or a private) making that in practice  9 cooperators (yes, three Monceau entities always make one Monceau, your second and third names have never duplicated you, have they?) have veto power over any decision. Pay your cooperative, which is quietly wiping its feet on the « one cooperator = one vote » rule…but all this should have a « positive impact on…the democratization of the economy and of society in general  » (p.8, I underlined, just to remind all those who reproached me for falsely attributing to NewB any desire for large-scale change).

3. Disturbing language

With regard to the Societal Committee, which « has no power of injunction » (p.5), the charter advocates a « flexible » dialogue (p.3) with the teams on the implementation of the values within NewB and a « dialogue » (but this time not « flexible ») with the Board. What does that mean? That the Board is able to silence the Societal Committee? Is there a smell of greenwashing or am I dreaming? For example, it would have been possible to give this committee some power, or to ensure that it has at least one vote on the Board of Directors via a non-executive director’s seat (its members are still volunteers). I mean, anything that doesn’t make you think that you can automatically answer « cause always ».

Words, only words, but important words. Thus, moral and sexual harassment is described as a « plague », which avoids having to consider it as part of a system (and not a singular calamity) of patriarchal domination. The patriarchy moreover well represented with three men at the head and a Board of 12 people in which there was only one woman in 2018 (to know that there is still no parity today). How, then, can Article 91 be taken seriously when it states that « NewB promotes the appointment of women to senior positions in the professional hierarchy ». What is to be understood about the forthcoming appointment of Thierry Smets as the new CEO when NewB states that, with equal skills, the candidate from the under-represented group will be chosen (p.65)? That there are no competent women and/or racialized people to lead NewB?

However, a « zero tolerance » policy will be applied in cases of discrimination on the basis of personal characteristics (p. 67). A « zero tolerance » which, moreover, only applies after repeated discriminatory behavior. Tolerance +1 +1 +1= 0, NewB mathematics.

On diversity again, we arrive at aberrations like the fact that  » [qu’]clearly indicates in the job advertisement that NewB has an active diversity policy allows the different target groups to apply without fear of their own prejudices that would make them believe that it is impossible to be hired at NewB » (p.61). Ah, these audiences from diversity, they are still full of prejudices about the dominant, not understanding anything! Is everything okay? Saying is doing, isn’t it?

Promises are only binding on those who believe in them… and those who are not too careful, as when article 87 of the charter invites its personnel to « flexibility », and to part-time work which allows « promoting diversity within the teams » (p.56). It does not matter that feminist authors have shown that women’s part-time work is not a matter of choice but an indication of male domination and that, consequently, it is a matter of fighting against it rather than reinforcing its institutionalization(see, for example, chapter 7 of this book).

How does NewB intend to make money?

In order to pay off debts, to continue to be able to pay salaries, to provide the planned banking services and therefore its social mission and, finally, to pay for all the « services » mentioned above, including the « external operators », NewB better have some really good ideas to make money. Is this the case? Let’s see.

One will be pleased to learn that NewB « does not seek to generate maximum profit at any cost but to operate in a financially sound manner » (p.18). For the « maximum profit », there is no fear to have, indeed. For the rest, I would be less confident.

1. A bond portfolio

While NewB will use about half of its equity in lending to its customers, it will invest the other half in finance (see table on p. 41 of the charter). An « ethical » finance that promises to leave aside « activities that violate human rights » (p.40). Indeed, we remember that a central element in its advertising communication a year ago was the assertion that it would not participate in financing, for example, the arms trade (see photo).

Is it honest? The answer is NO.

NewB invests in the production and trade of weapons. Contrary to everything she told you, it will fund the arms industry. In fact, the bulk of its financial portfolio will consist of bonds (« government bonds »), most of which will be Belgian government bonds (p. 41). However, the Belgian State, via the Walloon Region, is sole shareholder of FN Herstal, a huge arms manufacturer and dealer whose group also owns two US arms companies. It is probably not useless to recall that the FN Herstal quietly exported its « products » to Saudi Arabia, which used them in particular  in the criminal war it is waging in Yemen . Are we all right with all this ethics?

In those days, bonds were good for business. Yes.

I would like to add, for those who think I am exaggerating, that if the Belgian citizen does not have the choice to effectively finance the arms trade at least via taxes, the same cannot be said for NewB which, as long as it is in loss, does not pay any. It could therefore remain in line with its main principles. As for the financing of weapons being « only indirect » (and therefore « not counting »), you would also think that it is rational to make your teenager promise to do not use specifically the 20€ pocket money you give him to buy his weed? It doesn’t make sense: you give him money, he smokes, you fund his smoking, that’s all. 

The funny thing is that even government bonds, which are considered « safe investments, » have risks. Thus,  Belgian government bonds currently have a negative yield (-0.354%). In summary, NewB will pay to finance, among other things, the arms trade. We’re going to have to start coming up with some better ideas to be ethical and to replenish the coffers, right?

2. Financial products and shares of SICAVs

However, we can be reassured (haha), NewB « does not market products that could lead to excessive risk-taking for the bank » (p.13). Except that in terms of financial products, it too will resort to the derivatives market (p.42). Among its financial products — an explicit intention since its creation, in case some naive people would think that it has been put to them recently — NewB will propose shares of SICAV . Beware, « ethical » SICAVs. It changes everything. The constitution of the « packs » will be entrusted, once again, to an external operator who will obviously have to be paid (re-Sugus?) and whose identity is still unknown. (Say, it wouldn’t be Monceau back there, would it?)

The financial crisis of 2008 has put pretty much everyone in agreement on the need to distinguish between deposit banking (the « real » business of banking) and investment banking (AKA, the rogues). Although NewB is not strictly speaking an investment bank, in the sense that it does not build hundreds of financial products, it has nevertheless expressed the wish from the outset  » to see investment funds among the products offered  » (p.43).

Yes, but these are SICAVs that are reputable and ethical, we said! They are set up to meet SRI criteria, the socially responsible investment. I’ll be honest, I didn’t stuff myself the 43 pages of the file explaining how the label guarantees ethics (someone to do this job?) but, on the other hand I give you some examples of others  institutions whose products are also labeled « SRI We find, among others, AXA, BNP Paribas, HSBC  the bank « of all scandals according to Le Monde or the investment bank Lazard. What a great world. NewB is therefore content with a label already embraced by the biggest crooks in finance. What else does it contribute?

NewB also expects the fund manager of these SICAVs to play an « active shareholder » role. The idea is to use one’s strength as a shareholder to « influence the behavior of certain companies » (p. 44). And what, while waiting for the aforementioned companies to hypothetically comply with the « ethical » demand of our shareholders, we do what? If NewB promises to divest if the issuer does not change its practices, this means that it was initially acceptable to invest in a company that did not respect our principles.

A snapshot of an ethical financial market. Source

Finally, the return that can be expected from such SICAVs is probably much lower than the word itself may suggest. Between the fund manager to be remunerated, the NewB client and the return on the investment itself, there’s not much commission left for our lovely socially responsible bank. This is still not the place to fill the Executive Committee’s lunch box, especially since, to avoid being affected by the « systemic » risks of finance, NewB promises never to raise money on the financial markets. This is all very well, but once again, it limits its ability to finance itself and it is not certain that it will be able to find cooperators to replenish its liquidity when salaries have sucked itdry.

3. A credit policy of its own

She also wants to earn money with the credits she will grant. Except that credits (even « ethical » ones) are precisely risky assets. Bad payers can be found everywhere — among the sarouel-cravats too. So, credits, yes, but in small doses and well chosen.

Given NewB’s financial situation, it will have to be extremely cautious in its lending policy, preventing it from innovating — contrary to what it had announced from the start - (innovating is eminently risky) and forcing it to rely on marginal loans in terms of amounts for projects that have been seen and reviewed in their scope. This is confirmed on p.38 where we understand that you can finance the purchase of an electric scooter, the exterior insulation of a caravan, or « pre-finance your subsidies » if you are an ASBL (which is nevertheless risky, when we see, for example, the recent cuts in the cultural budget in Flanders).

Indeed, out of the 37.000.000€ that NewB will have in equity, only half can be converted into instalment loans (it’s not me who says it, it’s the projection p.41). 18.000.000€ that will have to be divided in multiple credits, let’s say a few thousand, to dilute the risk. How much is left? 18.000€ on average per credit, which is nothing at all. It is therefore easier to understand the « restrictive » list of credit possibilities, which is not only extremely limited, but also says nothing strategically about its ability to simply reach its objectives. For example, if an electric vehicle is soft mobility, how does NewB view a company like Tesla? Well? Not good? What do all the labels it complies with think?

In summary, does NewB have something to offer in terms of credit that another bank does not? No, nothing at all. Will it « finance the ecological transition »? No more.

4. What clients will pay

Otherwise, as in all banks, customers will pay monthly for banking services (except that here they will be less efficient and less numerous than elsewhere). And since clients are usually also cooperators, they pay twice. Section 23 of the charter states that it is this cost that should provide a margin that allows the bank to be economically viable, a speech that is constantly changing since NewB used to rely on its insurance to generate profit. We are already told that, despite the absence of physical agencies, these products and services will not be « individually the cheapest on the market » (p.19), but that NewB would opt for « free pricing ».

NewB bankers get paid by the hat. (Warning, this is a fake news).

What a great idea, right? Each person could therefore choose, according to his or her means, what he or she can pay to the bank.

In fact, behind an attractive concept, there is exactly what I denounced during the debate organized by ATTAC last January: the very capitalist practice of charity. Let me explain: by relying on « conscious choice », NewB relies on the idea that the more affluent will pay more and that this will allow the poorest to benefit from its services as well. In other words, the richest give to the poorest. But it is important to understand that these charitable mechanisms do not change the power relations. By its very nature, charity does not change the structural mechanisms that produce domination (in this case economic). Becoming a client of NewB will not help a poor person get out of his or her shit or change anything the fact that he is subject to poverty because of the exploitative relationship that links him to the rich.

On the other hand, it is relevant to ask why the richest are indeed richer. The richest are in fact the winners of the economic system that NewB denounces. In other words: NewB needs economically the ones it denounces to make it live and this aspect is clearly visible when we talk about its clientele, but, as we have seen, its dependence on the system is present at all levels, from its investors (Monceau), its partners (Rabobank, Mastercard), its Management Committee (private banking sector), certain third parties (Deloitte), etc. Do you still see anything subversive in it, capable of « changing the bank »? I don’t.

Cooperators of NewB, ℗oint your questions at the GA!

At this point, if I had been a NewB cooperator (which you can imagine is not likely to happen), I would already have many questions to ask at the general assembly: about management salaries, socially responsible mutual funds, etc. But I decided to make an additional list, with sometimes very specific questions because, as often happens, the devil is alsoin the details.

  • Why have you not yet gone before the notary to register the 35,000,000€ of subscriptions to the equity of NewB?
  • How successful is your Monceau insurance? Do you still rely on them to make a profit?
  • What exactly are the « termination benefits » for executive directors, mentioned but not detailed on p.71 of the charter?
  • Will the next recapitalization see a fourth « Monceau » legal entity appear (while the hijacking of the cooperative principle already gives increased power to the college of « institutional » investors)? Can you commit that this will not be the case?
  • When should the next capital increase take place, according to the business plan?
  • Why should these recapitalizations only be open to C share cooperators?
  • Who will be the external operator in charge of setting up the SICAVs?
  • What is innovative about NewB?
  • Does NewB already have and does it intend to have interests in other companies, and if so, which ones?
  • What do the other receivables in code 41 of the annual accounts correspond to? Money lent to whom, why?
  • What is code 8029 (appendix 6.1.1 of the annual accounts)? What was acquired for the sum of €315,887 in fiscal 2019?
  • What does the 150€ referred to in code 8365 (appendix 6.1.3 of the annual accounts) correspond to, knowing that if the amount of this acquisition is obviously anecdotal as it stands, it could suddenly increase in a future financial year?
  • What do the 27,000€ of commitments to affiliated companies, referred to in code 9502 (appendix 6.6 of the annual accounts), correspond to?

Why am I « picking on » NewB?

At the end of this analysis, there are several possibilities.

The first one, which seems legitimate to me, is a kind of state of amazement: we believed in this project with so much heart that such an avalanche leaves us speechless. This is true and this is why I insist so much on the importance of having a theoretical reading of the world. This is the sine qua non condition for having the capacity to make sense and to foresee what the « solutions » that are proposed to us will give. Prevent, not cure.

It is also possible that you will reproach me for being exclusively incriminating, for seeing evil everywhere, for interpreting every element in a negative way, or even for making cherry picking and not mentioning the positive aspects of the project. If you think that, I’m right. Yes, this article is incriminating but, yes, I think it is legitimate. As I had the opportunity to say enough a year ago, NewB’s apologists are far more numerous than its detractors. My voice, in this context, is not even a minority — it is negligible. Besides, I am less interested in the ad numerum argument aiming at listing all that is wrong with NewB than in the will to show concretely, by example, how a conceptual impossibilityis inscribed : entryism.

At this point, NewB is at best a charity that needs to start saving itself, as I mentioned in a debate organized by Attac last year. So, of course, we can continue to say to ourselves « so far so good », and go from recapitalization to recapitalization, until the day when the cooperators no longer want it. But as we know, « the important thing is not the fall, it’s the landing ». The structural effect of the constant losses incurred since the creation of NewB will one day be felt for good and we risk witnessing massive resignations of cooperators…who will not be able to leave since the statutes can forbid it if the viability of the bank is in difficulty. In other words: the trapped cooperators will be owners of shares that will be worth nothing. They will have lost everything.

And if, by some miracle, NewB did manage to make a profit one day, at the cost of some « trimming of its values », it would be so tiny, both economically and in terms of influence on society, thatwe would not feel the supposed benefits at all. A drop in a tank, precisely the point I was making a year ago. In the very long term, in case NewB finds the means to survive, there is no way out either. Why? Because it would take a huge clientele capable of both investing and being satisfied with tiny profits (or even losing money) for NewB’s contribution to society to be tangible. And the current Belgian society is not able to produce this clientele. There are many more real poor people than uninformed hippie-bohemians.

« Changing the bank for good? This is simply a misleading slogan. The bank will be doing very well, thank you, and the traditional banks even better perhaps because they will be able to say, for example, that they offer « ethical » financial products that share the same label as NewB. 

So, why am I picking on NewB?

First and foremost because for a bank that advocates ethics, there are too many elements that are truly scandalous. The cooperating ASBLs, the same ones that do not have the means to hire freshly graduated students, believed in this project and the people who led it. How many penniless co-operators have put themselves in difficulty in the name of this ideal? So I’m persistent because it seems to me that the time invested by the volunteers, the money invested by the cooperators, the energy invested, the intelligence invested…all of this represents a tragic waste. All these resources could have been put at the service of a real paradigm shift, not to a pseudo-attempt at reform that, without taking into account intellectual work and past historical experiences, nor concrete financial elements, continues to pretend to reinvent the wheel while it reinvents yet another version of the stick that is put in it.

I would like to thank Philou who helped me in the creation of this file, specifically in the understanding of the accounting and financial elements, as well as in the production of the related analyses. Thanks to you, I will have learned a lot. A huge thank you also to Ba, the lover I am with, for her expert and attentive proofreading and her always so relevant remarks.

I owe this calculation to Philou, who says: « According to the audited accounts as at 31/12/2019, the book value of the equity amounted to 1,736,625 EUR. It should be noted that between 31/12/2018 (the date on which the value of 5.95 EUR mentioned in the prospectus was calculated) and 31/12/2019 (accounts now available), an additional loss of 4,008,746 EUR has further reduced the company’s equity. If we reduce the value of the last audited equity (EUR 1,736,625) to that of the nominal value (EUR 15,279,480), a B‑share sold at EUR 20 nominal value was actually worth EUR 2.27, still less than half the value of EUR 5.95 published in the issue prospectus. »

Notes et références
  1. Je dois ce calcul à Philou qui précise ceci : « D’après les comptes audités au 31/12/2019, la valeur comptable des capitaux propres s’élevait à 1.736.625 EUR. Il faut savoir qu’entre le 31/12/2018 (date à laquelle a été calculée la valeur de 5,95 EUR mentionnée dans le prospectus) et le 31/12/2019 (comptes à présent disponibles), une perte supplémentaire de 4.008.746 EUR a encore diminué les fonds propres de l’entreprise. Si l’on ramène la valeur des derniers fonds propres audités (1.736.625 EUR) à celle de la valeur nominale (15.279.480 EUR), une part B vendue à 20 EUR de valeur nominale valait en réalité 2,27 EUR, soit encore moins de la moitié de la valeur de 5,95 EUR publiée dans le prospectus d’émission. »
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