Banking for the future: it’s all about reputation repair

annemarie van gaalAnnemarie van Gaal blasts banks who sell unfathomable financial products like derivatives to entrepreneurs.

Reputation repair. It has a nice ring to it, doesn’t it? I was reminded of it at a symposium called ‘Banking for the future’ held to celebrate the 25th anniversary of Dutch banking association NVB. Six years after the banking crisis, winning back confidence and repairing a damaged reputation is still a work in progress.

In his opening speech chairman Chris Buijink announced he was going to establish a ‘whistleblower facility’ for banks. Complaints will be registered and dealt with by a disciplinary committee. It’s a nice initiative. Of course we already have the Kifid, an ‘independent’ arbitrator in conflicts between clients and financial service providers. It has no disciplinary committee but, like the new initiative, it was established and financed by the financial service providers themselves. Kifid is not transparent and its arbitrations are published anonymously.

Bruijink promised transparency in the banking sector and I hope this includes his new initiative. There can be no reputation repair without transparency.


Finance minister Jeroen Dijsselbloem said in his speech that banks should find a solution for the derivative problems experienced by small and medium-sized businesses ‘quickly and adequately’. I agree, and on that note I would like to be the first to register a complaint: almost all the entrepreneurs who went to the bank for a loan ended up with an unwanted derivative product.

Those who asked for a fixed interest loan were offered a loan with a variable interest rate and a derivative to keep the interest rate risk in check. But entrepreneurs who preferred a variable interest loan were given a fixed interest loan and a derivative.

Hardly any of the entrepreneurs knew what the consequences of derivatives were likely to be. Expiry dates of the loans and derivatives may differ and the derivative may continue when the loan stops, with all the risks this entails.


The other day I met an entrepreneur who had sold his business. Some of the money went towards paying off his loans. The only thing left was a derivative linked to a loan from Rabobank. If he paid off the money he would also have to buy off the derivative. It cost him a million and a half. Nearly all the capital which he had worked for so hard all these years went to the bank for ending a financial product which he had never quite understood why he needed in the first place.

I talked to some Rabobank people about this and they admitted that the entrepreneur in question ‘naturally wasn’t a financial expert’ and that he hadn’t understood ‘how derivatives work’. But that didn’t alter the bank’s insistence that the derivative had to be bought off for the full amount. Where is the bank’s duty of care? Or doesn’t it extend to small and medium-sized businesses? Chris Buijink, here’s your first complaint.

Annemarie van Gaal is an entrepreneur and investor.

This column appeared earlier in The Financieele Dagblad.


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