Ethical bank updates its homespun style

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The Independent Online
SHAREHOLDERS in Mercury Provident, the self-proclaimed ethical bank, will have an opportunity next Saturday at the bank's AGM to find out more about the 'significant changes' which the bank says it is making in its operations.

Mercury Provident is one of a number of small European banks inspired by the spiritual and social ideas of Rudolf Steiner, known as anthroposophy. Mercury has lent to many Steiner education and health projects, but has also played an increasingly important role in the wider ethical investment movement. Mercury has made loans to arts projects, workers' co-operatives, wholefood firms, farms and smallholdings.

A boardroom reshuffle which replaced four of Mercury's seven directors last autumn appears to herald a move towards what a founder director, Christian Nunhofer, describes as a 'less homespun' banking operation. The bank recently developed a personal pension product and is trying to increase its range further. Staff numbers and costs at the bank's headquarters in Forest Row, Sussex, have increased.

Mercury has been unique in offering the concept of the 'target account', permitting depositors to choose directly which borrowers will receive their money. Borrowers benefit directly if depositors accept a lower rate of interest. However, the bank has recently had to increase its margins. 'Falling interest rates and rising costs have made it inevitable that we have had to spread the margin a bit wider,' said Mr Nunhofer.

An unresolved issue is Mercury Provident's relationship with Triodosbank, a Dutch bank also based on anthroposophical principles. A Triodos director, Peter Blom, joined the Mercury board in the reshuffle last year, and earlier this year Mercury told its supporters that a merger was being contemplated. According to Mr Nunhofer, however, the nature of the Triodos link is still under discussion.

Saturday's AGM is being held at Ryton Gardens near Coventry, the organic gardening centre which is one of Mercury's borrowers.

Shareholders may take note that Mercury's search for a new professionalism could be reflected in directors' pay. The company chose last year to increase the salary of its highest- paid director, Duncan Power, by almost 30 per cent to more than pounds 38,500, a low figure by City standards but high compared with pay levels in many of the projects supported by the bank. Mr Nunhofer said: 'It's more that he was being underpaid before, rather than being overpaid now.'