Sustainable bank NewB must strengthen capital

NewB, the sustainable cooperative bank, needs extra capital due to the many start-up losses. The bank is aiming for 40 million euros of fresh money, which would make it good for years to come.

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The bank NewB recorded a loss of 9 million euros last year. That is more than double compared to 2020, when the bank officially kicked off. This year the loss will increase: to 11 million estimates Thierry Smets. He has been CEO of the bank for a year and a half, which now has a completely new executive committee.

The expected losses for this year necessitate a capital increase, because taking into account the losses since the bank’s inception, it would significantly reduce shareholders’ equity to less than half of the capital. In the new annual report, which will be online soon, the auditor has reservations about NewB’s chances of survival.

• NewB lets customers determine their account costs themselves

Still, things don’t all go wrong, says chairman Bernard Bayot, who was involved with NewB from day one. ‘With the new capital we will be able to provide more credit. With these resources we want to focus mainly on the energy transition. That fits in perfectly with our calling.’

Katrien Beuckelaers, commercial director of NewB, says that NewB assumes that the bank will break even in 2026. That is the point where neither profit nor loss is made. Until then, the losses keep piling up. For example, it is normal that the losses continue to deepen this year, says Smets. ‘Last year our team doubled to 50 employees. That expansion weighs in the books for 12 months this year.’

NewB positions itself as an alternative retail bank that aims to support the local and social economy and support climate objectives. The bank has 116,000 cooperators, 17,000 of whom do their daily banking transactions with NewB. It takes 118,500 customers to break even.

‘The interest rate is also important. We have 150 million in deposits and on that money we pay the ECB a penalty interest of 0.50 percent’, says Smets. The ECB is expected to make interest rates positive this year. But NewB is not taking that into account for the time being.

Sober Flemings

NewB has raised $50.2 million since its inception. Of this, only 33.7 million remained at the end of 2020. Including last year’s losses, equity may already have fallen below half of capital, requiring recovery measures. And these consist of the intended capital increase of 40 million. Who will put that money on the table?

‘We are not targeting the ordinary cooperative, but are targeting institutional parties and hope that the regions and the federal government will also support us,’ says Bayot. In the past, French-speaking organizations put more (start-up) capital on the table than Dutch-speaking ones. ‘Flemish people look more at numbers and facts. Now that the basis of NewB has been established, we see an increase in interest on the Flemish side’, says Beuckelaers.

NewB can also relaunch if it finds twelve million, but the intention is to raise enough in one go to be able to continue for a few years. ‘If we don’t find 40 million, we will have to discuss the next steps with our board of directors and the regulator, the National Bank. But we assume that we will find the money’, says Smets. He expects to complete the capital increase this summer or in September. NewB already has contacts with various parties to cough up money, but no contracts yet.

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