It’s not often you’ll find the head of a UK bank wandering around a solar farm in his jeans and fleece, or tending plants on an organic farm. But Bevis Watts, the new head of Triodos bank’s UK arm, is not your average banking chief.
An environmentalist by training and former chief executive of the Avon Wildlife Trust, Watts is bringing the sort of eco approach to money management that could benefit some of the UK’s larger financial institutions.
Just four months into the role after replacing the 14-year tenure of Barclays alumni Charles Middleton, Watts is already putting his unique view into action at the Bristol-headquartered bank.
“Triodos is a different sort of bank, and as an environmentalist rather than a banker, I’ve got a different perspective on things,” Watts says. “Banks need to behave differently in society. Yes, they need to serve the customer, but they need to better serve society, and the planet, too.”
On his vision for the bank and its ambitions, he says: “Triodos is a household name in the Netherlands and in Spain and there’s no reason we shouldn’t be the same in the UK. We’ve got more than 50,000 UK personal and business customers currently – I look forward to seeing that reach well into the hundreds of thousands.”
The bank’s long awaited personal current account is due to launch next year. “Then we’ll have the opportunity to be people’s “first bank”, Watts says. People will choose to bank with us not because we’re offering whizzy tech or a financial sweetener that is later recouped through charges, but because they see us a reference point for mutual values.”
There is an economic need for a new approach to banking that is recognised by the UK’s most senior policymakers and economists. Mark Carney, governor of the Bank of England and Adair Turner, former Chair of the Financial Services Authority (now the Financial Conduct Authority) have referrred to “socially useless” banks and their desire to change the role of banks.
Triodos says it only lends to businesses that demonstrate a positive impact culturally, socially or environmentally. At a time when GDP is under pressure and the divide between rich and poor continues to grow, Watts says the bank really comes into its own: “You often find our growth is countercyclical to GDP growth. GDP is a measure of spending, it doesn’t account for personal indebtedness or financial hardship. Our lending reflects that. Over the past few years we’ve increased lending related to an ever-broader range of societal issues – affordable housing, adult mental health organisations, even a church-led foodbank in London.”
The increasing evolution of these types of organisations and their need for capital means Triodos is well-placed to continue growing.
Lending to such organisations, which are often rejected by larger banks as too risky, is not likely to deliver a ‘quick profit’, but it is Triodos’ bread and butter and ensures it fulfills its mission to be socially useful.
It has not used the various government quantitive easing-driven schemes designed to increase the flow of capital to the country’s small businesses and has no plans to take advantage of the latest lending scheme.
Indeed, Watts thinks this is likely to further increase the UK’s wealth divide and possibly prompt another housing bubble, as banks lend their new-found capital to pretty much the only hitherto perceived safe bet of retail property.
Triodos’ approach is profitable. More profitable than you might think. Since the 2008 financial crisis it has delivered a Return on Equity (RoE) – the measure that banks use – of between 3.4 and 5.5 per cent. Watts reckons no other bank has managed the same. He says: “It’s another proof our model works. With interest rates so low, why wouldn’t you bet on a bank like Triodos for the future? Other newer banks may offer something attractive, sure, but we’ve been doing this for 30 years.”
“People keep waiting for the old fat goose to lay the golden egg of 20 per cent returns again. Yes it may be possible but won’t be stable and certainly won’t be sustainable. Especially with today’s costs and regulations. The golden goose has flown away.”