V. RELEVANT FINANCIAL INSTITUTIONS

V. RELEVANT FINANCIAL INSTITUTIONS

1- Types

Despite the growing importance of the third sector in Italy, until 2003 the initiative of ethical finance had supported the no profit enterprises very limited, because of cultural and technical reasons. The no profit enterprises have peculiar and diversified needs not only restricted to financing: qualification of the offer of financial resources (credit and capital) and other resources (professional, human).

The Italian no profit enterprises have as financial interlocutors, other than regular circuit of credit and financing institution, Banks of Cooperative Credit and other institutions that proceed to allocate finance to the social enterprises sharing the ethical finance criteria.

BANKS OF COOPERATIVE CREDIT

The so-called BCC were born as rural and craft bank in the period time in between the end of 19 centuries and the beginning of the twentieth. Founders were co operators inspired by the Social Teachings of the Catholic Church which helped the lower classes rural population to get rid of the misery and usury.

Therefore this type of Bank came from a need and an utopia. The need of making larger the number of people allowed to obtain loans a better condition compared to those applied by traditional banks and the utopia of making a connection or join together solidarity and enterprise, people care and capacity of auto finance.

So on, the rural and craft bank maintained a strict bond with the referring territory, crossing their story with that of the community , as much as gain the nickname of “local Bank”.

The credit cooperative bank in order not to lose the benefits connected to their small dimension, organized themselves in a national system called cooperative credit divided in two versants: the associative and the entrepreneurial they both assure the integrations, synergies and the economies between and for single enterprises.

The bank of credit cooperative are part of the international credit cooperative system.

INSTITUTES OF ETHICAL FINANCE

1- The Ethical Bank

The ethical bank it’s a popular bank. This is the juridical form that allow to operate at a national level without contradict the main principle of cooperation and solidarity. The proper popular bank features consist of a public shareholders and democratic process of decision and participation. With the principle “one head one vote” the supremacy of the person respect the finance capital is stated.

Ethical Bank support the no profit world and the jointed economy. It also finance the social cooperation, the international cooperation, environment tutelage, civil society. Responsibility, transparency, solidarity, participation, sobriety, efficiency are the referring values to give strength to an economy and a finance that care about men an environment needs.
The idea

Ethical popular bank born to realize the idea of a bank meant as gathering point between savers who aim to a more conscious and responsible manage of their savings and the socio-economics initiatives inspired by a supportable model of socio-human development, where the production of wealth and its allocation is based on values of solidarity, civil transparency and common good realization. Acknowledged that a society transformation goes trough a transformation of the

productive system as well, ethical bank is mainly focus on issue such as social and environmental responsibility of the enterprises, processing new model of interventions and new organizational modality both at a national and international level.
The history

Few years ago some voluntary and social solidarity organizations begun questioning themselves on the finance enterprise and money positions and they realized that the development and wellbeing of a community were in a tight relationship with money and activities connected to it.

1994: 22 no profit organizations made the decision to get together toward the ethical bank.

1995: The cooperative toward the ethical bank came to life with the purposes of building a real bank which will have the credit cooperative bank form and to spread the cultural message brought by the ethical finance. Purpose: collect 2.5 million of Euro as a capital stock.

1996: to get over the difficulties of constitution as credit cooperative bank (this typology can operate only locally) the board of directors made the decision to constitute as popular bank which require a higher capital stock though: about 6.5 million of Euro. It begins a promotional and informative campaign run by the most involved members. Came to life the G.T.I ( Groups of Territorial Initiative).

1998: The member special meeting, got together in Padua, deliberated the transformation of the cooperative “Toward the Ethical Bank”, in Ethical Popular Bank and named the first Board of Directors. Members vote the documents about the member’s territorial organization and name the first ethical committee. The Bank of Italy gave its authorization to the execution of the credit activity of the bank.

1999: ethical popular bank became operatives. Open the first office in Padua and then Brescia and Milan.

2000: constitution of the Ethical Company of Savings Management, which purpose is to offer products coherent with the values that inspire the bank’s action. Grand Opening of the office in Rome

2001 – 2002 grand opening of the offices located in Vicenza, Treviso and Florence

2003 Ethical Company Saving Management launch three ethical investment funds Responsible Values. Came to life the cultural responsible ethical foundation. Grand opening of the offices located in Bologna. Trough a Bank of Italy’s communication born the Popular ethical bank group, formed by ethical popular bank as leader group and Ethical Company Saving Management as controlled company.

2004 was signed up a cooperation agreement with the Brazilian state for the program hunger zero. Ethical Bank get awarded for not violence given by Sansepolcro district (Tuscany), in collaboration with the international foundation Don Luigi di Liegro and with the association Culture of the Peace.

2005 It starts the internationalization process putting their product in the Basque countries. Grand opening of the office in Naples first in southern Italy and it got certificated SA 8000. Grand Opening of the office in Turin.

The decentralization process get started giving impulse at the southern Italy net of development. Came instituted also an Ethical Pension Fund and the relationship with the net of European Ethical Finance get closer

The Proposal

You can be part of Ethical Bank in different ways: being member, acquisition of stock market, Proposing a project and apply for a loan, opening a bank account.

Participation

With Ethical Bank the saver is allowed to indicate the field where he wants invest his savings:

• 
  social cooperation: educational socio-medical services, struggle against the social exclusion and the introduction to labour of weak subjects
  
• 
  environmental tutelage and preservation of cultural heritage
  
• 
  international cooperation
  
• 
  culture and civil society
  

Responsibility

With Ethical Bank the savers get to choose the rates applicable to his savings, between a maximum rate prefixed by the bank and zero rate. Choosing this last one the saver can expressly show his will to actively participate at the realization of the financed project.

Credit Transparency

All the information about the granted loans are public: name, amount, rates, guarantees, motivations. All the information are available on line.

Ethical preliminary inquiring

Ethical principles are followed also in the phase of credit allocation, actually this is the base of the trust relationship between the bank and the savers, therefore next to the traditional banking inquiring we will find a social one, conducted trough the VA.R.I model ( values, requirements, commercial directors), able to analyze the impact that the activities can have on human development, common good, natural environment. The loan is granted after a positive conclusion of an exam about economic and social supportability.

The VA.R.I model ( values, requirements, commercial directors)

This model has a guide which help to understand the single parameter of evaluation.

This valuation model must follow previous and fundamental steps:

Any demand of financing must come after a filled up application form which contain a enterprise description in all its essential characteristic

It’ s necessary to define a threshold of admissibility underneath which the financing can not be allocated. An auto-certification must be provided by the association or enterprise which has to certificate the respect of the minimum criteria that guarantee the coherence between the enterprise activity and the finalities of Ethical Bank project

Once defined the threshold of admissibility the procedure will go on through the evaluation based on the VA.R.I. model.

This model is based on 9 fundamental value that the applicant must respect. To any value correspond essential requirement in order to respect them.

The 9 values identified by Ethical Bank are: democratic participation, transparency, equal opportunities, environment respect, social quality, respect of work conditions, voluntarism, solidarity, territorial bonds.

Any values has its own requirement following listed:
Democratic participation

Meaning the intern and extern organization procedure which testify a diffuse participation of employees, members, volunteers, as well as some other actors whose activities is strictly connected to the institution life.

Requirement

• 
  Convocation regular assembly.
  
• 
  Member participation in assembly.
  
• 
  Committee and/or forum organizations.
  
• 
  Presence of the workers in the assembly.
  
• 
  Balancing between members and workers.
  
• 
  Possibility of nominate the board of administrators .
  
• 
  Economic participation.
  
• 
  Participation in the making decision process.
  
• 
  Presence of an intern code.
  
• 
  Stakeholder involvement .
  

Transparency

It’s the group of rules that the organization must follow during the public revenue draw up. Inside the organization the transparency is about the smoothness of the communication among different organs.

Requirement

• 
  Internal constant flow of information.
  
• 
  External constant flow of information.
  
• 
  Frequent communication with stakeholder.
  
• 
  Presence of balance of the business even when is not mandatory.
  
• 
  Presence of balance or report socio-environmental .
  

Equal opportunity

It’s about the racial and sexual respect, as well as a particular attention to minorities tutelage. This respect must be present whether internal or external activities.

Requirement

• 
  No sexual discrimination.
  
• 
  No racial discrimination.
  

Environment respect

it’s about process made up by the organizations in order to reach the environmental bearableness of their own activities, through internal control of ambient management and increasing of environmentally compatible production.

Requirement

• 
  Respect for the external environment. Reduction of the polluting emission and consume of resources.
  
• 
  Continuous improvement.
  

Social quality

It means the social quality level reached by the products and in the process. This value express itself trough a set of certification and with registered trade mark.

Requirement

• 
  Socially useful products/services.
  
• 
  Respond of capability to the area’s needs.
  

Respect of the work condition

These are procedure to keep monitored the workers conditions regard the respect of the effective regulations and also regarding ethical and behavioural code effective inside the institution.

Requirement

• 
  Balanced relationship between employees and other salaried.
  
• 
  Minor work formation program.
  
• 
  Clean and hygienic place of work.
  
• 
  Job security.
  
• 
  Schedule respect.
  
• 
  Salary balance.
  

Voluntarism

Meaning the process of strengthening of the volunteer resources under the profiles of growth, formation and involving in the making decision process of the organization.

Requirement:

• 
  Strengthening of the voluntarism
  
• 
  Constant training of the volunteers.
  

Solidarity to the weaker classes

It’s the set of rules that underline the organization inclination to the weaker classes of the society. It’s mainly advantaged the working introduction of indigent workers.

Requirement

• 
  Presence of left-out and disadvantaged workers.
  
• 
  Extra work activities: play game and meeting.
  
• 
  Availability to the extern.
  
• 
  Contributes to support external weaker subjects.
  

Territorial bonds

It’s about the ability of the organization to be present in the referring territory and they are showed through synergies with other social actors present in their referring territory.

Requirement

• 
  Knowledge of the territory.
  
• 
  Relation with local institution.
  
• 
  Rooting of the workers and of the no workers members.
  
• 
  Tangible presence in the territory.
  

2.The Social Enterprise Development Company Stock Corporation
This company it’s a stock company without a lucrative purpose and it’s about supporting the begin, development and subsequently consolidation of the social entrepreneurial activities, through finance instruments.

History

On March tenth 2005 the Saving Bank institution of Rome (now days Saving Bank Foundation of Rome) constituted the Social Enterprise Development Company with the same purpose said above. The credit experience, the sensitivity toward the third sector’s issues, the will to be involved in a new way in order to give its contribute to heal the social situation of privation, made possible, already during the same year, an involvement of important corporation groups, which endowed the Social Enterprise Development Company of a bigger operational strength making it part of the specialized financial intermediaries operative in the ethical finance.

Economic help and support in areas related to human being’s respect and improvement are the purposes that Social Enterprise Development Company try to achieve through the daily execution of its own activities.

The Company strategy it’s about the utilization of its own economic resources as a leverage to appeal new resources which are going to be used to create initiative of social entrepreneurial development.

This Company has sponsored 474 entrepreneurial projects in 9 years with an outlay of 53 million Euro and employing 2.211 new workers of whom 20% belonged to disadvantage category.

Finalities

Beneficiaries of the Social Enterprise Development Company are not lucrative association or institution, included social cooperatives provided by the law 8 November 1991 n.381, with the purpose to facilitate their own spread and growth.

Sponsorship’s activities is made through all the legal allowed form such as loans allocation, with or without security, financing whether in its own behalf or in behalf of credit institute or enterprises, participatory lends or subordinate lends, give guarantees is allowed as well.

Financing motivation can be every utile activities for the entrepreneurial development and qualification in the no profit sector.

The development activities can be realized on its own or joined with public or private subject, in realization of international, European , national and local programs with occupational, fight the exclusion, local development with particular focus on disadvantaged areas, finalities.

This Company can hire participations and shares in the profit of enterprises, social cooperatives, consortium or institution, toward which realizes its own activities in the limits provided by the art. 2361 civil code and anyhow excluding the finality of placing to third parts.

This company can also perform activities, whenever supplementary to the achievement of its social purpose, of:

commercial and industrial operations

acquisition, transfer, exchange of registered personal property, real estate properties and rights.

Income distribution is forbidden, therefore after have set aside the 5% of the income to the legal reserve, up to the legal limits, the remaining income will be added to the extraordinary reserve.

Members
These are important entrepreneurial and financial groups that share the Social enterprise development company purpose. The company’s capital is subscribed as follow:

	Euro	%
FONDAZIONE EUROPA OCCUPAZIONE	14.685.792,26	85,23
ITALIA LAVORO S.p.a.	1.235.543,95	7,17
FONDAZIONE CASSA DI RISPOARMIO DI PUGLIA	411.847,98	2,39
ATLANTIA S.p.a.	334.488,49	1,94
SAIAT S.p.a. ( Telecom Group)	291.934,43	1,69
CAPITALIA S.p.a.	222.718,87	1,30
Confederazione Cooperative Italiane	24.250,51	0,14
Associazione Compagnia delle Opere	12.125,25	0,07
ANCST Cooperative e Servizi ( Legacoop)	12.125,25	0,07
TOTALE	17.230.827,00	100

3. Proximal Bank
The banking group Intesa San Paolo, recently unified, decided to operate in the sector of ethical saving and credit through the creation of a new institute entirely operative in the no profit which will be called “Proximal Bank”. It will come to life by the end of 2007 with the first two offices and aim to be the first among the major banks operating in the area of ethical finance. This institute already has a portfolio of 40 thousand units of no profit entities.

At first glance this bank is potentially able to serve 4000 clients. This ambitious project has been introduced into the general industrial plan 2007-2009 and, if it would be realized, would be the first ethical bank coming from traditional bank environment rather than no profit and voluntary sector.

All the authorization’s request have been forwarded to Bank of Italy which should formulate the authorization shortly.

Hasn’t been entirely specified yet what kind of commercial strategy proximal bank wants to follow, so there might be ethical window inside the already consolidated circuit of Intesa Bank San Paolo, in this case the new bank could take advantages from the net of clients already existent. It’s nearly sure that by the end f the current year – after have received the mandatory authorizations though - proximal bank will open its two first offices which will have the new denomination and they will be totally emancipated from the existent circuit. The two offices will be located in Milan and Rome.

It might be interesting notice that Intesa Bank was one of the banks accused to be involved in the worldwide weapons market (its name appeared in the campaign against “armed banks”) and now decided to be operative in an environment that fight wars and weapons.

In its most recent communications Intesa group declared not to be anymore involved with any kind, direct or indirect, of war or weapons trade.

Another main issue it’s about the social liability. San Paolo Bank, years before had joined Intesa, started a line of financial ethical products. They consist of ethical funds inspired by the main responsible investment criteria identified at an international level. In the list of financial ethical products San Paolo has been present for years and always has had leading positions. Proximal Bank though will change the national situation and the new institute will become direct rival of ethical bank.

(informations dated 15/05/2007,from the web site http://www.redattoresociale.it)

Bibliography

The information brought in this document have been drawn by the following sources:

1. 
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2. 
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3. 
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4. 
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5. 
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6. 
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7. 
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8. 
   Le istituzioni non profit in Italia. Dimensioni organizzative, economiche e sociali; a cura di G.P. Barbetta, S. Cima, N. Zamaro; Bologna, 2003
   

9. 
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10. 
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11. 
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12. 
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13. 
    Sito del Ministero dell’Economia e delle Finanze: www.finanze.it/export/sites/default/finanze/dossier_tematici/onlus/altre.htm
    

14. 
    Sito della Compagnia Sviluppo Imprese Sociali SpA: http://www.cosis.it
    

15. 
    Sito di Banca Etica: http://www.bancaetica.com
    

16. 
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