‘Significant’ loss of value threatens Triodos shareholders

The sustainable bank Triodos has found a solution for the stalled trade in its own shares. It moves away from the quasi-guaranteed price and allows supply and demand in the certificates to determine the price. “Right now that would mean the price will be significantly lower than the old price,” it reads.

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The originally Dutch sustainable bank Triodos has a peculiar shareholder structure. Strictly speaking, not a cooperative, but the bank did work with a certificate system in which private shareholders can invest. Triodos ensured that the certificates could be traded at a price determined in practice. Losing seemed impossible, making it a safe investment.

For forty years that trade ran smoothly: the number of buyers and sellers was nicely balanced. Until the beginning of 2020. More certificate holders – partly due to the uncertainty of the corona crisis – wanted to sell certificates instead of buying. Result: no auction could take place. This was echoed in the Dutch press – stories about people who urgently wanted to sell due to an inheritance issue – which made the situation even worse: even more people wanted to get rid of their Triodos certificates. As a result, the trade in Triodos certificates has been frozen since the beginning of 2020. The management therefore announced that it was looking for a solution for the 45,000 certificate holders, including 7,400 Belgians.

Looking for third party

That solution was announced today, Tuesday. Triodos is switching to a Multilateral Trading Facility (MTF), a kind of internal stock exchange listing, without being listed on a real stock exchange. The most important change as a result is that the price of the certificates is no longer guaranteed. This will be determined by the price game between supply and demand. Given that the number of sellers is currently higher than buyers and taking into account the situation in the financial markets, Triodos expects a ‘significantly lower price’ for the certificates than the old price. To support the price, the bank wants to buy its own certificates for 14.4 million euros.

Lieve Schreurs, spokeswoman for Triodos Bank Belgium, emphasizes that trading will only start within twelve to eighteen months, which means that the market situation and therefore the price cannot be predicted at that time. “Right now we are looking for a third party to help us set up the trading system. It should be available in the five countries where we operate. The system will also be subject to the financial regulators of those countries. New shareholders will have to register. Mechanisms will be built in to prevent a large party from taking over the bank.’ The issues with the depository receipt holders are completely unrelated to the bank’s profitability and have no bearing on the bank’s ordinary customers.

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