This is a CTP of initiative: FEBEA/Banca Popolare Etica (Italy)
This critical turning point describes the change of leadership in Banca Popolare Etica. In 2010 concludes the fourth and final term of President Fabio Salviato, one of the founders of Banca Popolare Etica who has been BPE’s first president. Besides, at that time, the shareholder’s assembly of BPE elects the new members to the Board of Directors involving that some historical members left the board. 2010 National Assembly was a highly emotional moment. Attendees warmly thanked the outgoing directors who had created the bank from scratch and make it a relevant institution in the Italian and European context.
The first critical point to me, is in 2010, when there is a change in the Board of Directors of Banca Popolare Etica. In particular, I would highlight the change in the presidency, from Fabio Salviato to Ugo Biggeri. With this new stage there is a profound change in the internal organization of the bank.
Fabio Salviato was the person who has been there from the outset. He is the person who had the idea of creating the first Ethical Bank and we have worked with him from the beginning. The first year of activity without him, the year of the transfer, it was a little strange. But for me it was good because we have grown.
The General Assembly elects a renewed Board of Directors under the leadership of the incoming President, Ugo Biggeri. The Board of Directors, whose members are democratically elected among the shareholders in the Assembly, is the body in charge of the management of both the social and financial activity of Banca Popolare Etica. According to the respondent, the new board introduced changes in the organizational culture, which involved the professionalization of the cooperative.
The Board of Directors is the intermediate body between all the partners and stakeholders and the operational part of the bank, including employees. During Salviato’s mandate, the bank worked in a very familiar way ... the President talked to each of us... He was the head of the Board of Directors, who was the body in charge of developing the cooperative's strategy, but he behaved as just another worker. Fabio also participated in the most operative part. That was weird, because a Board of Directors does not normally talk about the arrival of a new colleague or the existence of a new small banking product.
The new leaders distributed responsibilities within the Executive Committee and the different bodies of the initiative. Besides, Biggeri refused to be directly involved in the daily tasks of the headquarters' office in order to focus in developing a political and strategic role:
The turning point involved a change in our corporate culture...To my mind the Board of Directors has to talk about strategy, it has to develop the bank's future vision. The Board of Directors must communicate the strategic vision on the project for the next three or five years to all members, to all employees. Salviato was like a father. He run the bank like a father. With Hugo Biggeri as president, we professionalized. To me it has been clearly a positive change. He changed the direction and changed the whole Board of Directors and this in my view was a critical point.
Several actors within Banca Popolare Etica have been referred as co-producers of this critical turning point. The shareholder's assembly was the institutional body responsible of the election of the new Board of Directors. The Assembly is “the sovereign Bank body in which all shareholders can participate”. One essential difference between ethical banking and traditional banking are the egalitarian participatory rules that the former apply in their decisions when making structures. Thus, the statutes of BPE posit that “everyone has the same right to vote, whatever the shares they hold”.
Moreover, the Assembly is to be considered as a place where people, who carry ethical finances in their heart and who strongly believe in its principles, can meet, exchange experiences and opinions. The new president, Ugo Biggeri, was elected by a majority of delegates, who represented more than 34.000 members, including 5.142 legal entities.
Banca Etica is a popular banking institute, under the legal form of a cooperative. This legal form allows operating at national level, in accordance to the founding principles of cooperation and mutuality; encourages a widespread share ownership and the existence of democratic processes of decision making and participation; following the principle of “one person, one vote” it is characterized by the, so called, “shareholder supremacy” (Banca Popolare Etica Website).
The Statutes of the credit cooperative stipulated that each member of the Board of Directors- including the President- is elected for a three years term and they can be re-elected for a maximum of four consecutive terms. This Critical Turning Point occurs at the same time than the end of the fourth term of President Fabio Salviato.
Salviato was the main leader of the cooperative until that moment and he had prior extensive cooperativism experience, as well as in cooperation and working with the Fair Trade movement. He was a charter member and was involved in the establishment of the “Cooperativa Terzo Mondo” Consortium. Besides, He is both a founding member of BPE, the first ethical bank in Italy, and also of “Consorzio Etimos”, a financial consortium that supports small entrepreneurs and develops microfinancing programmes in the Global South. Salviato is currently the Chairman of FEBEA (European Federation of Ethical and Alternative Banks and Financiers) and the General Manager of SEFEA (European Company of Ethical and Alternative Finance).
When Salviato leaves the presidency, the General Assembly elects a younger person who had a deep knowledge of the cooperative, and who had been a member for more than eight years. Biggeri’s profile is different from the former president's. He holds a university degree in physics (1993) and a Ph.D. in electronic engineering. He had an extensive background as researcher and lecturer (at the University of Florence) as well as in sustainability consultancy. Besides, he has also volunteered in several NGOs, being the president of the association “Finanza Etica” and of the “Responsabilità Etica” cultural foundation.
Some related to this CTP events can be pointed out. First, May 2009 General Assembly is directly linked to the event that leads to it. In that gathering, the shareholders of Banca Popolare Etica intensively discussed the possibility of changing the Statutes of the initiative. The topic for discussion was the convenience of changing the rule limiting members of the Board to no more than four consecutive terms of office.
The President of the Bank, Fabio Salviato, met members of the different territorial areas and consulted them the sustainability of the proposal. At the end of the round of consultations, the idea that it was more democratic to keep the constraint on a maximum number of mandates prevailed. Finally, maintaining democratic practices was considered more important than having experienced members in the Board of Directors.
As a consequence of the Critical turning point, the interviewee mentions the enlargement of the structure of the bank. The cooperative increases in number of offices and more personnel are hired to develop new banking activities and services.
There is a change. Little by little we were defining the organization. We distinguished between the more political, the more strategic part, which is leaded by the Board of Directors, and the operative part, which manages the bank.
Connected to this turning point, the interviewee raises the improvement of BPE external communication strategy in the period 2010-2012.
After 2010, the year when the turning point happenned, the cooperative improved its presence on the Internet. We have now a very strong online reputation. Now, we have a vision of what can be done. The change started with the new Board of Directors probably because of their different vision on how to use social media platforms like Facebook, Twitter ... These new information tools are a precious source because many people know us through their computers, mobiles, or tablets.
The professionalization of the bank brought also new services and products. The respondent mentions the online banking platform that Banca Popolare Etica launched in 2014. It served to attract new customers that could operate through the Internet without walking into regular offices.
Since 2010 we renewed the entire Webpage. We made finding our products and different services more simple. Little by little we came to the possibility of having an online account service, online banking.
This event also coincides with the outreach of the financial crisis and the increasing general awareness on bad banking practices many entities were conducting in Italy:
Then we started to have online accounts ... around 2012-2013. That involved a lot of work in the beginning because people demanded an online account, and debit cards. Having the possibility to have a bank account in a value-based bank was very important for so many people. A bank that does not work with arms industry! It made sense to work with ethical banking and many people saw in the Website that we are an ethical bank.
A last related event is the ongoing reorganization that the current CEO aims to develop in Banca Popolare Etica. The respondent briefly describes the process in the following quotation:
The new CEO, who changed last year, together with the president, wants to have a new structure. They want to separate the strategic part, the political part and the operative part. It will be a different way of understanding the bank.
No strong contestation was reported by the interviewee. According to her, the majority of the members of Banca Popolare Etica welcomed the election of the new Board and the new President. The changes introduced by the new leaders were seen as adequate and expected by a majority of associates and employees.
The new Board of Directors adopted a completely different way of managing the bank. But this new Board was a good choice, a good way to continue our activity.
The turning point came at an opportune time, when the cooperative celebrated its ten years of existence. It had expanded along the country, opening offices in both the North and South of Italy and had more than 34.000 members, including 5.142 legal entities which represent the diversity of the Italian social and solidarity sector. It was time to renew the cooperative’s strategy and proposals were very welcome.
The interviewee remarks the support that the new Board of Directors received from the personnel of the cooperative. Employees were empowered by the new leaders and were willing to assume new responsibilities and collaborate in the designing of the new banking strategy:
People were optimistic and positive. Probably because we were at the right time, at a time when we had to do this, because in 2007 we had around 150 employees. We were professionals capable of making decisions, managing risks, managing new risks in a professional way. This event positively affected the whole organization, all employees, I think. We were around 150 hired people in 2010. Now there are 100 more.
Being asked on whether the associates of the bank had overseen the CTP coming, the respondent affirms that everybody was aware of the change in the leadership, due to the fact that it was imposed by the internal rules of the organization.
In order to facilitate the participation in the structures of Banca Popolare Etica and in decision-making processes of all associates, the pioneers had included in the Statutes of the cooperative that the Board of Directors mandates duration was three years and that they could be elected only four consecutive times. So, the 2010 shareholder’s assembly had the responsibility of appointing both the members and the president of the new Board of Directors.
Besides, a consensus regarding the perception of this event as a critical turning point in the History of the initiative seems to exist among the associates of Banca Popolare Etica. As the respondent explained in the previous sections, the changes introduced by the new leaders improved greatly the structure of the initiative in terms of its professionalization and the social and political impact of the initiative.
The first lesson that Banca Popolare Etica drawn from this critical turning point relates to the evolution process that social innovation initiatives like credit cooperatives should have in order to address people's credit requirements, especially the requirements by marginalized social groups, or by the organizations that work for the common good. The initiative behind the creation of this bank was started by a group of volunteer associations and cooperatives in Northeastern Italy, which aimed to build a credit cooperative to provide funding only to projects with a social aim.
As life of the initiative depends on its members, the cooperative considers its shareholders the most important human resource and the initiative pursues their active involvement in the bank's life. However, when the cooperative expands its activity to the wider national context, and experiments an increasing demand of banking services, the initiative must professionalize their structure as well as clarifying the responsibilities that, on the one hand directors and employees must take and, on the other, the role that (local) shareholders should develop in the bank's social and cultural activity.
As a consequence of this CTP, Banca Popolare Etica is progressively promoting a professionalization process, hiring more high-qualified personnel and defining new strategic lines for the mid-term and long-term.
Probably the workers were a bit confused. There was no difference in roles, right? The president was almost like the staff, he behaved as another employee. And initially the Board of Directors had a strategy. They created the bank and had to supervise the activity, the further development of the cooperative. For me there was a lot of confusion ... and if the former Board had continued more years in charge, workers would have been very confused about their role. We worked daily without a long-term strategy that we really needed in that moment.
Organizations need to also have a long run vision, a little more widespread one over time, right? A vision on the pathway we want to follow.
Second, the Board of Directors, and especially its President, starts to assume a leading political role in supporting Ethical Banking and good practices in the financial system. 2008 financial and economic crisis negatively affected the Italian economy. Besides, Basel III banking regulations (which required increasing capitalization levels) jeopardized the viability of credit cooperatives and small local banks in Europe. Thus, Banca Popolare Etica launched during the current decade several campaigns (e.g.“not with my money”, "Let's change finance to change Italy" “Tobin Tax”) to gain public support for Ethical Baking institutions.
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