NewB is on the ropes but does not admit defeat

The ethical bank is struggling to raise the 40 million euros necessary for its survival. It is preparing an alternative plan to be presented to the National Bank.

Hour zero has come for NewB. To ensure the continuation of its activities over the next four years, the ethical bank had to raise 40 million euros by 30 September 2022. At the time of the completion of this edition, it seemed unlikely that he would succeed. However, for NewB, the amount raised will probably be insufficient.

In recent weeks, NewB’s management has struggled convince public authorities to support his project. Brussels Secretary of State Barbara Trachte (Ecolo) withdrew a check for one million euros. On the Walloon side, the Minister of Social Economy Christie Morreale (PS) offered a support of three million euros, supplemented by an extension granted by the Minister of Climate and Energy Philippe Henry (Ecolo). If PS and Ecolo agree on the need to support the NewB project, this is not the case of the partners MR (in Wallonia) and Défi (in Brussels), who fought against this project considered “non-priority” in the current crisis situation. energy and budget scarcity.



“Wallonia will not intervene”.

Cabinet of Walloon Minister of Economy Willy Borsus (MR)

At the time of writing these lines, the government officials had not yet reached an agreement, the point remained on the agenda, without anyone seeming to be in a hurry to make a decision. A “soft” way to bury the file? On the part of the cabinet of the Walloon Economy Minister Willy Borsus (MR), we did not hesitate to say in the affirmative: “Wallonia will not intervene”, says his spokesman. But on the side of the other parties, we left room for doubt.

However, for NewB, the amount raised will be insufficient. The National Bank of Belgium (BNB) has in fact asked the young bank to raise 40 million euros. “This amount, which makes it possible to cover the capital needs of NewB as defined in its industrial plan for a period of four years (from 2022 to 2025), must be collected, at least in the form of firm recapitalization commitments., For 30 September 2022 and this guarantee the operational continuity of NewB in the short and medium term“, Reads the report of the KPMG auditor, attached to the company’s latest annual financial statements.

Despite these dark clouds hovering over NewB, management wants to continue to believe it. He mobilized the general public around his concept of cooperative and ethical banking. More than 37,000 people and a hundred associations have signed this appeal.

37,000

signatories

The mobilization campaign around the NewB project has collected 37,000 signatures. But it is precisely 40 million euros that the bank needs to continue its business.

This shows that NewB remains able to mobilize supporters. On the other hand, the bank it still struggles to prove its economic relevance, which hampers potential investors. More than 117,000 mostly private cooperators initially invested in the ethical bank. But customers did not follow. Less than 20,000 people are currently NewB customers. This figure must be multiplied by five or six to ensure the profitability of the company, reported in June by Thierry Smets, CEO of NewB. During its last financial year, the bank announced a loss of 9 million euros.

Plan of attack

If the sum of 40 million euros is not reached, NewB does not capitulate. Its CEO Thierry Smets intends to present a new attack plan to its board of directors, which will meet on the subject next week. Thierry Smets will go to the National Bank. His first option is to convince the BNB that NewB can continue its activities despite the lack of capital.



“The worst case scenario is the end of NewB. But we could also put on the table the continuation of our activities in the world of sustainable finance, but without a banking license”.

Thierry Smets

CEO of NewB

If it fails, NewB he would lose his banking license, acquired in 2020. Catastrophe? Not for Thierry Smets. “If the National Bank withdraws our banking license, we will present different scenarios at the NewB general meeting of members. The worst case scenario is the demise of NewB. But we could also put on the table the continuation of our activities in the world of sustainable finance, but without banking license “, indicates the managing director. For NewB, this would mean a abandonment of banking. The company could no longer accept deposits or grant bank loans. She should reimburse its customers for the amounts deposited in their accounts. “NewB has the full capacity to make this refund,” reassures Thierry Smets.

But without banking, what would remain of NewB? Not so much. The company may continue to sell insurance products on behalf of third parties (which is not very successful). It may also continue to offer investment products, through its NewB Invest sicav, a facility managed by Orcadia, the asset management company of Étienne de Callataÿ.

Towards a new general assembly

NewB may also launch into other types of products that do not require a banking license, especially certain types of credit or certain asset management businesses, details Thierry Smets. The CEO believes he is able to grow these businesses and ensure a certain level of profitability. “We could evolve step by step. As soon as a business becomes profitable, we would move on to the next step. Keeping in mind the goal of recovering a banking license,” Thierry Smets points out. The different scenarios will be presented to the general assembly of NewB, which will decide. This general meeting is not scheduled before end of the year.

The summary

  • The ethical bank failed to raise the 40 million euros necessary for its survival.
  • But it is preparing an alternative plan to be presented to the National Bank.
  • Even if NewB loses its banking license, the bank’s management is working on several business continuity scenarios.

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