This is a CTP of initiative: FEBEA/Fiare (Spain)
The Critical Turning Point describes the “process of internationalization” that Fiare starts in 2010 with the aim of creating an European credit cooperative integrated by Fiare, the Italian bank “Banca Popolare Etica” (hereinafter: BpE) and the French entity “La Nef”. From 2010 to 2013, Fiare and the other two European credit cooperatives discussed and analysed the viability of founding an international bank, considering the legal restrictions in each country as well as other barriers and internal resistances which might compromise the new project.
Fiare was the most interested part in this internationalization process. The initiative was created in 2003 and since 2008, Fiare has started a process of expansion across the Spanish territory, enlarging the initiative in terms of both number of associates and social capital. However, after the 2008 financial crisis, Fiare leaders considered necessary to accelerate the pace of growth and found in Febea the right partners to start “a new European adventure” that could help them to deal with the unexpected consequences of the crisis, as the interviewee explains:
In 2010 we had already collected enough social capital. We had around 5 million Euros in social capital as well as almost 4.000 associates, including individuals and other entities and social organizations. At this moment, we started to think: why don’t we openly propose a process of integration to Banca Popolare Etica? We aimed to become a credit cooperative, with our social base in Italy and Spain. This was a kind of a seed for an European cooperative and we would see where this path shall lead us afterwards
The respondent describes this moment as a CTP in terms of the larger dimension that Fiare gained as a consequence of the process. First, FIARE was able to fund -through credit activity- social projects mostly related to social cooperation, international cooperation, environmental protection and sustainability, as well as cultural activities and civil society building actions. Besides, it meant reaching an agreement with BpE- but also involved an increase in terms of internal motivation, proud and external reputation across Europe.
Fiare promoted the creation of a new institution located in two different European countries, which represented a milestone for the whole European credit union movement and for the solidarity economy movement, considering that finding cooperative business experiences with an international dimension rarely happens:
It was an unexplored field, which had never been done by any social movement before, at least within social or alternative economy projects. I think that the more similar experience was the merger of Intermon and Oxfam ... It happened in conjunction with the process of regulation of the financial system, of nationalization of the financial system. While the leap from Euskadi to the rest of the state has been done many times, the Europeanization of Fiare was an innovative project. For us it meant to face the challenge of overcoming localisms, mistrust, prejudices but, eventually, it has been a source of satisfaction
In 2013, Fiare merged into the Italian Bank, which was over ten times its dimension and has more experience and which enabled Fiare to fulfill the legal requirements to be allowed to operate as a bank in Spain. The initiative builds to 5.300 partners in Spain in 2014, when the bank opens his first office in Bilbao (Basque Country). According to the interviewee, if this CTP hadn't existed, Fiare wouldn't have been a real banking entity, due to the new restrictions the European Bank introduced in the European financial legislation after the 2008 financial crisis:
I believe Fiare wouldn't be a bank, it would be a social structure linked to other allies, to the solidarity economy network, for example... Let's say, a financial tool linked to it. But, in my opinion we would not be the same bank we are now
The interviewee mentions two types of actors who contributed to the co-production of this critical turning point. On the one hand, he pointed out the role of pioneers and leaders of Fiare, many of them representatives of the Fiare founding initiatives. As he mentions in the following quotation, especially from 2008 onwards, Fiare approaches the wider public by inviting individuals to join the project.
The CTP occurs within a process of expansion of Fiare throughout the Spanish territory, by which the cooperative gained more associates and supporters that could now become real customers of an alternative bank. A broad network of social organizations and citizens engaged in the project and enabled the process of constitution of a European cooperative.
We started a project which was clearly led by social organizations and their networks. However, at that point, we wanted to involve citizens, individuals, too. Fiare is a project that needs a safety network which endows it with legitimacy, identity and values. A network of entities which contributes with an ideological corpus and a militant base. But the time came when ... this was not a turning point, because it was expected to occur… but there was a change of strategy when Fiare became open to the general public, to the citizenry. It meant a second phase in the construction process of our project
Concerning the context in which this CTP happened, a change in the spatial context in which Fiare develops its activity was mentioned. From 2003 to 2005, Fiare was born and expanded over the Basque Country and Navarre. Between 2005 and 2010, Fiare slowly expanded to the rest of the Spanish territory. The process was run by a group of pioneers, who frequently travelled throughout the whole territory spreading the project and encouraging the creation of Fiare associations in all regions.
It should be noted that the internationalization of Fiare takes place in a climate marked by the emergence of the 2007-2008 financial crisis, which severely affected the Spanish financial system as well as other small European banks. At that point, all the members of FEBEA, the European Federation of Ethical and Alternative Bank, were concerned about the effects of the financial crisis over local and ethical banking and reoriented the work of the network towards a more political activity, aimed at defending their position and viability in a context of crisis.
In Spain, Fiare was preoccupied with the decisions to be taken by the Bank of Spain and considered the alliance with two long experienced cooperatives -Banca Popolare Etica and La Nef- could be positive for the viability of the project, which involved a fundamental change: moving from being three small solidarity finance entities to turning into a full-service bank at the European level.
Since 2009, we realized of the consequences of the financial crisis. The creation of new small-sized financial institutions would be absolutely impossible from then on. In fact the small entities were gradually merging or were forced to disappear... The extreme difficulty of having our own banking license must be mentioned. Then, we reflected on the opportunity of working together, both in Spain and in Italy and we thought it was worth exploring this alternative
However, the constitution of the Common Market at the European Union level while removing several external obstacles (e.g. different legal frameworks, cooperative specificities, etc.) meant also that credit cooperatives needed to adapt their internal structures in order to create a new entity. Such obstacles prevented La Nef from joining the project, with Fiare and BpE as the two remaining initiatives which finally created Fiare Banca Etica.
The interviewee pointed out three events related to this critical turning point, which correspond to key moments that occurred before it. First, he mentioned the foundation of Fiare (the Foundation for Investment and Responsible Saving), the 8th of March 2003, by more than fifty organisations engaged in co-operation, social reinsertion and religious institutions, in attempting to create a social and alternative bank in the Basque Region.
The aim was to give financial support to the non-profit sector, which was very lively and active in the Basque region, and to create real investment opportunities for those most sensitive savers:
If we think about turning points, in significant changes in the project, whether strategic or critical moments, we can point out several events which relate with a change in the dimension of Fiare. At the beginning, we conceived Fiare as a Basque project, which soon gained a Spanish scope and finally, it became European. This critical event happened in 2003, 2005 and 2010. All these changes were unplanned, we did not expect such developments but all of them required us to adapt. In 2003, when we created Fiare, we obviously focused the project on the Basque Country. When we moved to state level it was because we realized that we had not enough members or supporters as to guarantee the financial sustainability of the project. But we also realized that there was no reason to restrict Fiare to a concrete territory
A second related event mentioned by the respondent is the first agreement signed between Fiare and Banca Popolare Etica. In 2005 Fiare signed an agency contract with the Italian credit cooperative with the aim of receiving technical support and training to start operating as a financial agent of BpE in Spain. Since October 2005, Fiare started to issue credits and accepting deposits, all addressed to the financing of high social value projects in Spain.
We were close to achieve the critical mass necessary for creating a new ethical-based credit cooperative in Spain. This objective required to collect a certain volume of social capital from associates. How to be able to reach a volume of social capital just by persuading people with a simple idea? Then, we considered that we should work as a bank and grant some credits. But to start banking without being a bank required imagination (…)
Banca Popolare Etica called our attention due to its similarities with us. It was a successful experience, a demonstration that a project like ours was possible; at least it was possible in Italy. Then, we asked them for help in developing our viability plan, and within these discussions it was clear to us that the most appropriate strategy was, perhaps, to start offering BPE’s financial products and services in Spain. We, as Fiare, had not the legal permit for being a bank, but we could be agents of BPE and offer their products and services in Spain, so we did that for a while
Besides, the respondent mentioned the successive expansion phases towards the Spanish territory. Since 2008 Fiare conducted a social capital raising campaign nationwide, targeting individuals to engage in the project becoming members of the cooperative. The goal was to reach a social base of 10.000 members, aiming to place the ethical banking project in the hands of citizens and entities, so that they become not just customers, but the real owners of the bank. Since Fiare couldn't reach this challenge, its leaders started to think about new formulas to achieve the minimum social capital required by the Bank of Spain to operate as a Spanish financial institution. Creating a European cooperative seemed to be the best alternative.
The interviewee did not report any contestation to this Critical Turning Point. He pointed out that the process of internationalization was promoted by a group of people that were either the founders or pioneers of the initiative. The respondent remark that:
It is important to note that we are talking about not only individuals, but founder organizations with high legitimacy (ONGs, Caritas, Solidarity Economy networks…)
These leaders have gained a good reputation over seven years running the project and the rest of the partners and members trusted them. For instance, when the president of Fiare, Peru Sasia, submitted his candidature for the Board of Directors of Fiare Banca Etica in 2013, he was elected president with 98% of the votes of the members of Fiare and a consequent wide support of the Italian (BPE) social base.
The leadership in this operation fell into the hands of some people. Few of us, who had and still have certain legitimacy, a high legitimacy, indeed
Besides, as the following quotation explains, many of the relevant decisions in Fiare’s history were endorsed by the majority of the associates and grounded on consensus-building processes:
Fiare has been built with the highest level of unanimity and consensus. The structure did not impose its decisions, but built legitimacy to take them. The pioneers, the core of Fiare, among which were the National Solidarity and Alternative Economy Network and other organizations strongly committed to Fiare, we raised and presented the idea to the rest of the members, and the regional networks liked the idea very much. There was not any problem at all(1)
A second reason which can explain the lack of contestation relates to the prior good relations that Fiare members enjoyed with the Italian cooperative Banca Popolare Etica. Both entities have signed a collaboration agreement in 2005 which gave Fiare a deep learning on banking activities, as well as “the cultural and political approach of BpE, notably similar to Fiare’s”.
Such agreement contributed to the acknowledgment of Fiare as a social innovation initiative, one with the potential of becoming an alternative to mainstream banking and which had the capacity to transform the social context by granting credit to a number of organizations and projects from several fields of the solidarity economy. This CTP meant another step forwards in reinforcing such previous good relations.
Note:
(1) N.A. the interviewee refers to the idea of the Europeanization of Fiare, of creating a European credit cooperative. Besides, he remarks the high legitimacy of founder organizations, as referred above).
According to the interviewee, the people who run Fiare at that time were able to anticipate the internationalization of Fiare would be a critical point in the history of the initiative. Likewise, during the three years that the process lasted, most of the members understood the significance of the event and ratified the decision of merging with Banca Popolare Etica in the different general assemblies celebrated during these years.
Thus, the initiative described in 2012 [1] the mentioned period as a process of maturity for the initiative:
"It is not an exaggeration to say that the year 2011 marked the end of a stage. A stage we could call "foundational", in which we have been building the basic social structure of Fiare and outlining our style of operation. A stage in which we have decided to develop together with the social construction of the project, an early stage financial activity as agents of Banca Popolare Ética, which allowed us to create an intermediation platform through which we were able to connect savings and credit for social transformation. It has been a very risky and tough bet that we have been able to maintain thanks to the commitment of a large number of people and organizations who have worked tirelessly, believing every day that Fiare is a worthwhile project” (Fiare, 2012 p.3).
In addition to the strong leadership exercised by the founders of Fiare - and by the president of BpE, in the Italian case - the anticipation of the success of the process was also grounded on the previous achievements that Fiare had obtained in the Spanish territory. The CTP takes place at an appropriate time for the expansion of the project, after 7 years of work and having gained a lot of experience and learning in banking operations. The previous agreement with BPE (signed in 2005) provided the leaders of Fiare the necessary knowledge and confidence to address with optimism this new stage and to be able to promote the creation of a credit cooperative of European scope.
As explained above, in 2010 Fiare counted on the necessary conditions for moving forward, taking advantage of the trust relationships that existed between several credit unions which were members of FEBEA (the European Federation of Ethical and Alternative Bank). The interviewee highlights the courage and common vision among the initiatives that made them able to overcome several barriers to run the new project, finding common ground in their shared interests:
This is a good example of the heart of Fiare Banca Etica. Because if we had followed rational thinking, a conservative way of thinking, it would have wiped out this process. Being conservative would have leaded us to do nothing. However, all of us shared the idea that this was going to be a stimulus for us; it was going to be critical for Fiare. I mean, critical in the positive sense
Despite the expected difficulties that the project involved in terms of bureaucracy and adaptation to legal regulations, the majority of the members of Fiare and Banca Popolare Etica trusted in the success of the process. This was not the case of La Nef, which decided not to merge and remained as a French financial initiative.
A large part of Banca Popolare Etica understood that assuming the challenge of merging with Fiare was going to be the stimulus they needed at that moment. They believed that it was to be a source of vitality. This vision succeeded. Actually, the Board of Directors of Banca Popolare Etica had advisors who had worked as bankers before, who had prior experience in the internationalization of a banking initiative. They pointed out the extreme technical difficulties that this process would involve
In the last years, la Nef has gone on its own through a process of becoming a French bank, forced by French authorities, with the consequent struggles
[1] FIARE (2012). 2011 Annual Report. Retrieved from: http://www.economiasolidaria.org/files/Memoria_Fiare_cast_2011.pdf
The respondent mentions several lessons that Fiare has drawn from this CTP. First, the leaders of the initiative have learned about the existing difficulties that an internationalization process involves in terms of regulations and legal barriers. Moreover, he mentions having learned about how to deal with frustration and anxiety, both frequently found in such long-term processes.
Expectations and optimist messages gave rise to the misperception that the integration between both initiatives was going to be faster and easier than how it actually was (some cases of demotivation or frustration were reported). However, the transformation of Fiare Banca Etica into a European cooperative has become a source of pride for all associates and an example of a benchmark of success in Europe:
The process of integration was exhausting, an exhausting process in terms of technical requirements. Besides, it was very challenging in terms of cultural integration, with many identities involved... for example, in terms of language, there are four different languages in Fiare Banca Etica, plus Italian. It has been a very challenging process
According to Fiare, every moment of change is always a time of crisis, which involves a radical change in the existing system. These processes require patience and commitment and sometimes people fear they may lose comfort, they may be afraid of new ideas, models and decisions to be taken. However, the prior good relations and confidence between both Fiare and BPE facilitated the merging process, as the president of the cooperative [1] ensured:
"In relation to the birth of Banca Etica we are fortunate to have experiences of implication and results in Italy and in Spain that proved we know how to work, that we know how to make sense of the use of money and that we are determined to use the potential of cooperation and participation in the best possible way" (Ugo Biggeri, 2012, p.23)
The second lesson extracted is the real alternative that Fiare Banca Etica became for the social and solidarity economy. Ethical Banking is built on different social movements and, consequently, one of the aims of Fiare is to strengthen those movements, becoming the financial instrument which contributes to social transformation by performing banking activity “inside the system”.
Besides, Fiare has increased their networking capacity, collaborating with other networks in the Spanish and European context. The experience described in this CTP permitted further collaborations and trades with other European banking institutions as well as with other allied actors: universities, trade unions and an increasing number of public administrations.
In this period, Fiare has served, to a certain extent, to raise public awareness on the role of money and on the failure of the current economic system, although the interviewee affirms that much work has to be done in order to engage ordinary people in ethical banking.
Finally, the interviewee describes Fiare project as a learning resource for the initiative, which enhanced associates’ leadership skills. Even, some committed members get involved in other transformative processes or candidate to political positions:
One of the outcomes is the process itself. We cannot establish here quantitative measures to assess the success of initiatives of this nature ... We are a project that tries to create citizenship. There are many European documents that talk about the value of social movements to create cohesion, to create citizenship (...) We have the capacity to engage committed citizenship. I do not know whether this is a coincidence ... but the same people who are involved in Fiare are in key political positions in many places around Spain
References:
[1] Opinion article of Ugo Biggeri in the 2011 Fiare´s Annual Report. Retrieved from: http://www.economiasolidaria.org/files/Memoria_Fiare_cast_2011.pdf
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