This is due to new capital guidelines as well as the massive writeoffs required because of sovereign debt problems in the southern European countries, especially Greece and Italy. I cannot believe that these are the last writedowns banks will prudently need to make. And one can only wonder where on earth they will find this capital.

Observers of the social finance sector will take heart to know that one bank is having no trouble. Triodos Bank, although this has not yet been officially released, but we have this from reliable sources) has already raised over EU 86 million from its existing individual customers. In fact, it has had to turn away institutions who were also interested in participating because of the high level of demand.

Let me repeat this, because it is actually rather amazing. A Eurozone bank has announced a capital raising and has had so much excess demand, it has had to turn down institutional investors to give priority to its existing customers. What is notable about this? First, Eurozone banks are having trouble raising capital, or even getting interbank funding — and Triodos, most definitely based in a core eurozone member, the Netherlands, seems not to be having difficulty. Second, I imagine this is in part due to some sense that Triodos is not involved in all the sorts of “fancy” things that have been working to sink the mainstream banks (structured products, sovereign lending, derivatives, etc). Third, it is giving priority to its existing customers over the more “important” institutions. That sort of loyalty feeds on itself — it means the bank will be able to draw on this goodwill in years to come. That individual clients have known they have been looked after in the past, I also imagine, is what has partly contributed to their interest in this issue.

Of course, we have all the obvious concerns about what has happened in the past when banks become flush with cash. We do know that Triodos is conscious of this history and the risks involved; and we hope for better with this social bank, as it grows it’s balance sheet. One thing is true, the absence of competition from other banks is certainly helping loan spreads — so this is a good time to be lending money. It also seems to be a good time to be a social financier. Merry Christmas Triodos.