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Banking, the Swedish model

Rising style of lending is built on long-term thinking – and on bearing in mind that the institution is dealing with real people's money.

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According to Ekobanken's Herlitz, with the advent of globalized finance, local depositors' money began to leave the community. The local focus is good for the economy and a smart business practice, she says, because the banks possess a "better ability to judge banking needs and risks."

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Lars Ingelstam, former professor of technology and social change at Linköping University, says that Sweden's sparbanks – its traditional community savings banks – have lost much of their local focus in recent years because of a series of mergers.

The Swedbank consortium now controls the bulk of the savings banks, Professor Ingelstam says. Through the mergers with Swedbank, the independent savings bank associations heavily concentrated their assets under the Swedbank umbrella. They have since been hurt by Swedbank's now diminished market value.

Ingelstam, who was the first director of the Swedish Secretariat for Future Studies, a think tank founded by former Swedish Prime Minister Olof Palmé and Nobel laureate Alva Myrdal, observes that society has been "far too narrow-minded" in its evaluations of "social progress and the economic measurements and the figures we build up."

Not necessarily small

Yet a healthy bottom line and access to a vast pool of credit remain standard measures of success. Triodos Bank, a self-professed "ethical bank" founded in the Netherlands in 1980, has much to brag about. It's one of the largest institutions in the sustainable bank movement, managing about $5.6 billion in total assets and operating offices in Britain, Belgium, and Spain. Last year, Triodos grew by a quarter and its net profits rose 13 percent. On June 5, the Financial Times newspaper named it the overall winner of its sustainable banking award.

"We have had a very good year," says Triodos spokesman James Niven, who attributes the bank's success to its "not being involved in all kinds of financial instruments."

Triodos does not invest in the subprime market or derivatives. "We take in savings from different individuals, and we only lend them to businesses delivering positive change for people or the environment," Mr. Niven says.

Although these banks stress that their ideas are based more on sound and ethical business principles than politics, some analysts believe politicians ought to take notice. Jakob von Uexküll, founder of both the British-based World Future Council and Sweden's Right Livelihood Award (also known as the "alternative" Nobel Prize), argues that banking interests have become so powerful that they have been effectively able to "take over governments to get the kind of legislation they needed."

Referring to the megabanks, Mr. von Uexküll adds, "They need to be dismantled.... If an economic entity is too big that it threatens the state, it threatens democracy."