This is a CTP of initiative: FEBEA/Merkur Cooperative Bank (Denmark)
The Critical Turning Point coincides with the expansion of the Merkur Cooperative Bank as consequence of a millionaire investment of a Danish Foundation- named Gaia trust- in 1993. This new shareholder permitted Merkur to enlarge and expand the bank over the Danish territory, opening offices in the main cities of the country.
As a result of this expansion, the bank was able to increase its investment capacity, gaining more customers across the country and giving more loans to fund projects related to sustainable development (e.g. organic agriculture, renewable energy, sustainable-oriented cooperatives, etc.). In the following years, Merkur starts to grow about 15% or even 20 % per year:
This signifies a push to the development of Merkur. There were many years when we grew with about between 15% and 20% every year. Even, there was one year when we grew 40%. I don't remember the exact date but, of course, it was after the investment from Gaia but I am not quite sure whether it was in 1994 or 1995… I also felt that this investment was very interesting because it gave us a new opportunity that we didn´t have before. It really pushed the bank and I think it was the following year when we had 40 % growth in the balance sheet, which is enormous! I think it came about because we reached a larger public as a consequence of this investment
The interviewee also remarks an essential characteristic of Merkur that has been manifested as a consequence of this critical turning point. Despite the expansion and enlargement – in the number of clients and employees- of the bank, Merkur´s associates and shareholders were always cautious and careful about not losing the core values of the bank, firmly maintaining their initial vision and principles.
Thus, becoming bigger and powerful reinforced their values, without compromising the principles and goals that motivated the creation of the initiative, as the respondent explains in the following:
What I think is interesting is that when I think of the development of the bank and the changes of that this critical turning point brought... it helped us to develop, it meant that we developed enormously in different ways, but the core of the bank has remained exactly the same, which I think is a very important point
When we had this push of capital to help us grow, it gave us the possibility of growing and we had to think to how to go about growing. And we related to the roots and to the core of Merkur to find out how to do it. In the same way, when the financial crisis rolled in, we went back to the core of Merkur to find out how to handle this. I mean, there were lots and lots and lots of work to be done but we didn't take decisions which removed us from the core of what Merkur is about
The critical turning point is produced fundamentally by the pioneers and leaders of Merkur Bank who, in 1993 and following years, run the initiative. They expanded the cooperative bank, opening new branches and increasing the number of employees.
According to the interviewee, before this critical turning point happened, the bank appeared to be “more a grassroots initiative than a real bank” in their internal organization and functioning. Thus, the expansion enhanced, in a certain way, the professionalization of their banking activity, but maintaining its core principles, such as transparency, openness, trustfully relations with customers, etc.
I have been in Merkur for 24 years. When I came, we were only 6 employees and now we are 80 or 85 and, of course, it is completely different. When I came to the bank even though we were bank, and we have been since 1985, so we had been a bank for 7 years, but the organisation was so small that it felt more like a small grassroots movement. We took the work very seriously, of course, but the feeling was different. However the core of the bank, the ideas we had built upon, are exactly the same
One of the principal actors in this critical turning point, who made possible the expansion of the bank, is the Gaia Trust. This foundation approached Merkur in 1992 and became a new shareholder in 1993. The significant fact is that, in spite of the millionaire investment (4 million kr), this new partner did not attempt to receive a privileged treatment from the bank. The trust did not demand more capacity of influence in decision-making or governance structures, as most of the investors usually have in the normal banks.
Moreover, the new shareholder endowed Merkur with a better professional appearance:
The investment...yeah...well it was more about that it allowed us to do, was to be more professional. All our brochures, that we presented to the public, received a professional once over. We received a professional revision so that afterwards, we could go out with more self-confidence. Everything looked a little bit homemade before so it became more professional and more convincing. But the content was basically the same which is very important
The economic and political context also contributed to this critical turning point. The original conditions to create a bank changed in 2000s (according to Basel II agreements). The new rules augmented the amount of capital that new banks need to hold to safeguard their solvency and economic stability.
As the interviewee explains, such circumstances frustrated the preliminary intentions of this Foundation to start their own bank and, as a result, Gaia identified Merkur bank as a suitable initiative where to invest:
Gaia was involved in another initiative, some time before, to start an alternative bank... But while they were doing that, the legislation changed. So, instead of getting together 5 million kroner, they would have to find 40 million. And they couldn't get the 40 million needed. I think that was part of the reason they thought that our bank was interesting
The first direct related event mentioned is the investment that the Danish foundation “Gaia Trust” made in 1993, that provided the necessary funds to enlarge the initiative. Second, the strength of Merkur Bank also involved the need of hire more personnel to manage the different offices. As it was explained above, previously to 1993, Merkur only had 6 employees. But, with the expansion, the policy of hiring people had to change.
Then, Merkur defines an appropriate human resource structure and starts the selection of qualified new co-workers. This is described by the interviewee as a challenge that Merkur leaders had to face:
Yes, It changed as a consequence of the expansion because as the bank expanded we had to hire more...we had to hire trained bankers. Where I came there were no trained bankers. That didn’t mean that we didn't perform bank work, of course, we performed good bank work but as we grew, the demands on us increased, and we had to have specialised people in the organisation who could go straight in and get to work in the banking business and so on… Even we were professional before…there was a growing need for hiring in professional bankers because they needed to get to work immediately on the bank work, it was so important
The bank pursues to develop “new ways of doing” banking activity, maintaining a close relationship with its clients, based on trust-building and confidence. Former employees conducted themselves following Merkur values for almost 7 years. However, due to the increasing number of employees, the managers of the bank were aware of the necessity of new hiring and human resources practices, training new co-workers in the values and characteristics that make Merkur a special bank to work with.
Since I have worked in Merkur for so long, I sometimes help to train new employees. I tell them about Merkur, what is the special thing about Merkur... because they know everything about banking but they don't know much about the way that we do in Merkur. So I help them with the background for the special way we do that
Going deeper into the idea of communicating to new workers the initiative´s philosophy, new introductory courses to Merkur´s employees were proposed seven years ago (about 2008). Such training also intends to encourage a common identity, a sense of belonging to a values-based institution that makes things different, even being a bank.
The involvement of relevant persons- such as several members of the Board- seems to be fundamental to the welcoming training:
I think, since maybe seven years ago, we also have introductory courses for new co-workers as I have said, 3 days: 1 day in the first 6 months after they start we have 3 days of introductory work and that is about ...I mean, they know everything about banking from other places that they've worked so we concentrate on other aspects that are different in Merkur from other banks. So it is also about the history of Merkur...
They meet the chairman and the CEO of Merkur, and that is a special thing. Many of the colleagues that I have spoke, they have never met a CEO or the chairman in the bank where they worked before. It means a lot that Board members take part in the introduction for new co-workers. Of course that is also a question of size, because if we have 5000 co-workers one day, maybe is not possible
The incorporation of a new shareholder, in special the one who aims to invest several millions krones in social capital, could produce some concern or discussion within the initiative. However, there was not contestation to this fact, as the interviewee explains:
I don't remember that... I don't remember anyone contesting that concept because, of course, it is very important that we are a cooperative, and therefore the Foundation didn't have more influence than any other shareholder, whatever the investment...Maybe the internal regulations were so strong and were so clear that all of us felt confident about how the bank was going to be governed after the investment
Begin asked about the reasons that could explain the absence of contestation, the interviewee highlights again the question of remaining close to the core values that led pioneers to start an ethical and sustainable bank in 1982. For example, regarding internal governance, Merkur is a cooperative bank which applies the egalitarian rule of “one member, one vote” in general assemblies.
As the next quote explains, the members of the bank were strongly confident in the good faith of the new shareholder, as well as in the good functioning of their internal rules, that they did not feel concern or preoccupied in terms of their principles and decision-making practices being compromising :
The whole point was that we found a trust, and a man who wanted to strengthen the work that we were doing and, since we are a cooperative bank, there is this very important principle of one member, one vote, so even though he put in a huge amount of money, compared to all other shareholders, he was a cooperative shareholder with one vote. So he didn’t have more to say.
Of course we had talked with him before, because it was a very important step for us. And, of course, if we had not been so strong, there are ways of influencing organisations without having a formal vote, but we stuck to our core and to our basic ideas and this man was interested in strengthening just that core and just those ideas
This critical turning point was anticipated by most of the people involved in Merkur Cooperative Bank at the time it occurred. As the interviewee explains, associates were aware that this event “was a very important step” in terms of gaining capacity of impact. However, the expansion of the bank was part of the strategic development of the initiative. Then, the new investment just accelerated the future scenario traced by the leaders of Merkur:
I think that much of the same would have happened, but slower so it gave us the opportunity to take a large step in one go. We were ready for it and the public was ready for it so it was a lucky stroke but I don't think that it was a critical point in the sense that the bank would not have existed today for instance if we didn’t receive that money. Certainly not, but it was a very important step because it allowed us to, to take a leap and after that, after a while we could do some PR (public relations) which allowed us to really take big steps at one time. Otherwise we would have just expanded slower, but we will still have expanded because the idea is so important so, it wouldn't have died, I do not think so
Besides, Merkur leaders also anticipated some of the outcomes that this critical event will produce. For instance, regarding the employees, in 1993 they were only six or eight people hired by the bank. The investment allowed them to open new branches and more personnel needed to be hired. This issue was perceived also as a critical point, as the interviewee explains in the following:
So it was a very, very steep curve, a very steep growth and we had to work very hard on the challenges that that gave but they were more of a practical kind...how to find the new... the right employees, and how to expand in the way we did... I think...well we have always found it was maybe the most critical point in expanding is finding the right employees because if the employee, if you have new employees and don't learn to represent values of the bank in the right way and work along those ideas we lose our soul. It only works if the employees at the bank can actually represent our core values
Having anticipated the eventual expansion of Merkur Cooperative Bank and the enlargement of the structure also reinforces Merkur´s principles and core values. Leaders and activists were concern about future difficulties and made an important effort to maintain a clear vision about what are the main objectives of the initiative and how to become a better instrument for sustainability and social economy:
It is something which is very important to keep our minds open and to keep everyone awake and always remember what we are here for, which is not only about banking but it's about banking in a particular way because if we don't work differently from other banks there is no point in being Merkur. it's a kind of ethics issue... and social issues...environmental issues
Merkur´s founders and first associates were strongly committed activists that they had to prepare themselves and self-learning “how to run a real bank”. The interviewee highlights the uncommon profile that herself, and most of the members, had in those days, considering that none of them had deep knowledge in banking management nor have developed professional careers related to finances:
When I had the opportunity to work in Merkur, I didn't know anything about banking. I became very, very, interested in what happened in Merkur and I thought it was a fantastic place to work. So there was the opportunity for me to stay on and I have been privileged to work in Merkur now for 24 years, and I don't have a banking background…At the time when I started, Merkur was a very small organisation and there were no bankers, we all had other backgrounds. I was a trained organic farmer, which means that I have used my knowledge, of course...My first time in Merkur was learning about banking… after a few years my main work was with our organic farmers
Running a cooperative bank also involves learning about managing staff and developing competences in human resources. Merkur employees are encourage to maintain an open mind, being curious and take time to be well informed about what is happening in many different fields:
Well of course every time we look for a new employee in Merkur we say that we need a person with varied competences on the banking field, some of them know about private costumer services or someone who knows about business costumer services or someone who knows about back-office services of varies kinds of...whatever.. But we always write the values that the bank is based on and when we employ someone new they have an obligation to be open towards the ideas that the bank is based on. They have to have an understanding of the ideas of Merkur
Based on the expected outcomes of expansion, Merkur started to introduce an internal culture of learning in a more explicit way. Training was not only oriented to new co-workers but to everyone involved in banking activity, in order to acquire enriching knowledge that increases the comprehension of their clients’ activities and needs.
It is not only for the new employees. It is for everyone but we don't do it every Tuesday anymore but I thought it was a very interesting part of Merkur, I personally liked it a lot and of course that is part of being in Merkur, it is part of keeping your mind open to, also to new things and getting to know aspects of other people's work that you don't know about so it was very interesting but now we have some other ways that we still sometimes have the cultural sessions on Tuesdays
As the interviewee explains, the bank created spaces for social learning where members learned from each other not only about topics related with the fields they are related but also endorsing a holistic vision of their role “as human beings” in the world:
When I started we had a very good tradition of every Tuesday morning we would gather for one hour and learn something so every Tuesday, everyone was together and received an introduction to something, and when I say something it was really something, it was anything. It was often about particular aspects of the philosophy behind Merkur bank but it could also be an introduction to certain areas that we finance like organic farming or free schools that we do a lot in. Or a certain kind of pedagogical approach or something about music... ...But it could also be something which is about the human characters, about art, about...it could be an NGO for instance... that was among our clients who would come and explain what they...about their area of work, so anything at all. The whole idea is really that we as employees in Merkur should know about the fields that we are working in but also that we should be as human beings not only as employees in Merkur but as human beings open to learn more about the world. That was a very important and very interesting part of Merkur. It is not quite as strong anymore but we still have this internal school or cultural sessions
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