Charles Middleton: 'Yes, I'm a banker who really cares...'
It's not hard to run a bank on ethical principles, the boss of Triodos UK tells Sean Farrell
Outrageous bonuses, socially useless trading, shaky funding, reckless lending and dealing with dodgy customers. These are just some of the practices that have stirred mounting anger about the banks' role in society. With protesters camped at St Paul's and railing against City excess, Charles Middleton wants to let people know that his bank has nothing to do with this mess. Mr Middleton is the UK chief executive of Triodos, which bills itself as one of the world's leading sustainable banks. Founded in the Netherlands in 1980, the bank has operated in Britain since 1995.
Since Mr Middleton joined the British operation in 2003, its lending has increased from £60m to £413m without exceeding its 75 per cent limit on funds to loans. That means that it always has more deposits than loans and does not tap wholesale markets, where funding droughts have proved fatal for Northern Rock and others.
So how has the mounting antipathy towards banks affected Triodos in the UK? "It's an interesting time," Mr Middleton says. "There have been more phone calls and people hitting our website. We're trying to get our views out there, partly because every time I turn on the radio they are talking about ethical banking and we believe there are specific things people can do to have an impact."
He admits the "emotional response" of customers to the crisis has so far been stronger in countries such as the Netherlands and Belgium than in Britain, but he believes Triodos can win more business if it can get its message across.
Triodos sticks to the basics of banking that became obscured by financial engineering, racy funding and a dash for big returns in the years before the credit crisis. Money it raises from retail savers is lent to social, cultural and environmental businesses that meet the bank's "sustainability" requirements.
Unlike other banks, it also publishes details of all the businesses it lends to, so that savers can see where their money goes. The list is filled with environmental, campaigning and social enterprise clients such as Cafédirect, the fair trade coffee and tea producer, Jamie's Farm, which offers agricultural rehabilitation to deprived urban children; and Visionary Soap Company, a maker of fair trade beauty products.
Mr Middleton, a married father of three, spends much of his time visiting and learning about businesses he lends to. In the UK, Triodos is expanding lending to social housing and food recycling companies, among others.
The bank has about 30,000 savers in the UK and Mr Middleton thinks the opportunity is there to make that number "significantly bigger". He says competition is tough because the bigger lenders are straining to attract deposits but, with low interest rates making a real return "practically impossible" for all savers, the added attraction of ethical lending could be persuasive.
"The product has to be right but there is a great story in terms of what we are doing with our money," he says.
Banks are usually wary about identifying their customers, citing confidentiality reasons, though this also helps to make the projects they fund difficult to pin down. Triodos gets over this problem by stipulating to all borrowers that they will be made public. Mr Middleton concedes that this would be hard for mega-banks such as HSBC or Barclays, but he argues that they are "in denial" and missing an opportunity to regain public trust.
"They are so defensive about this sort of idea but there is an enormously positive impulse that can come out of this. They desperately need to be seen in a more positive light and this is one thing that could do that. They can't publish the full list of customers overnight but they could be more transparent. It's quite sad at a time when some businesses are thinking quite deeply about what this means for their business and looking at ways they can make changes."
Pay is a big issue on which Triodos claims the high ground. Mr Middleton is coy about his salary but he earned less than the not-so-huge €258,000 (£222,000) paid to the group's chief executive, Peter Blom, last year.
Triodos also has no contractual bonuses, though a few individual employees were paid a discretionary two months' salary last year and every European worker got €300 extra as a reward for the bank's performance.
Before moving to Triodos, Mr Middleton was a traditional commercial banker for many years at Barclays, whose US chief executive and powerhouse investment bank are high on many anti-capitalists' target lists.
When he joined Barclays, its Quaker roots were still in evidence but the bank veered off in a new direction, he says. "I don't think we valued [those values] quite as much as we should have done. When you see how banks like Barclays have evolved, you can see how we lost sight of some of the traditional ways of doing things."
However, Barclays did give Mr Middleton the chance to see the world and he spent 11 years overseas in India, Botswana and the Caribbean. India was what started to make him think more about the ethics of banking.
"It was such a privilege to be there and we were so well received by our Indian friends. There was an opportunity to do something and we worked on some [charitable] projects there."
When his family returned to the UK, he sold to friends some of the hundreds of photos he had taken and thereby funded the education of 17 Indian children.
Once back in Britain he spent a year travelling to Africa every month for work, and was looking for opportunities in the charity world when a Dutch friend introduced him to Triodos. He could not believe his luck. "They were looking for a UK CEO and it was aligned with where I wanted to be," he says.
If he can be heard above the clamour, Mr Middleton's time may just have come.
What the customers say
* Gaby Guyer, a Triodos saver for 10 years: "With other banks you don't get publications coming through the door with information about where your money is going. It feels like I know the projects and where the money is invested. With other banks, you're never quite sure who's being exploited."
* Richard Scanlon, finance director at Cafédirect: "We've banked with Triodos since 2004 and there's a real difference. Charles Middleton came in last month and spent 45 minutes finding out about our business. You feel like you are working in partnership and they are investing in your business."
* Jamie Feilden, founder of Jamie's Farm: "We borrowed £400,000 from Triodos last year to buy the farm. We approached other banks without Triodos's agenda and they weren't interested. Triodos took a lot of time to understand our business."
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