In 2020, a consortium of European values-based banks acquired a 78% equity interest in 3Bank (formerly known as Opportunity Bank Serbia,OBS). The consortium was led by Triodos Investment Management, through its Triodos Microfinance Fund and Triodos Fair Share Fund, and included two more GABV member banks, GLS Bank and UmweltBank, both from Germany. The equity share was acquired from Opportunity International and its investment vehicle, Opportunity Transformation Investments. The new investors each hold a significant minority share in 3Bank and a seat on the 3Bank supervisory board, which also includes independent directors.
3Bank is specialised in microfinance and provides a range of financial services to underserved people and businesses in Serbia, in particular in rural areas. The bank is a member of Opportunity International, a global coalition of organizations dedicated to providing opportunities to people in less developed countries. Some of its partners are also members of the GABV.
Vladimir Vukotic, Chief Executive Officer of 3Bank: “Since our founding in 2002, we have been committed to providing financial services to people who are underserved by banks. 3Bank has achieved substantial market shares in Serbia by financing farmers and entrepreneurs, while at the same time recording financial returns among the highest of all Serbian banks. What makes us especially proud is that 45% of our new loan clients are first time banking clients, and 75% of our loan clients are from underserved rural areas of Serbia. We are delighted to welcome Triodos Investment Management, GLS Bank, and UmweltBank, who will support our efforts in achieving social impact, provide additional strength to OBS, and help us in develop green finance programs.”
The history of OBS
The seed of 3Bank was planted in 1999, when the newly graduated economist Vukotić started working at Opportunity International in Montenegro. The organisation aims to give everyone access to loans and other financial services to reduce poverty. Not that young Vukotić was so passionate about financial inclusion. “It was wartime. It was the only job I could get without connections,” he jokes. But he quickly became captivated by the subject, and in 2002 he founded Opportunity Bank Serbia, now 3Bank.
3Bank lends to small-scale farmers and entrepreneurs who are often too small for other banks. “We are far from what people consider an ordinary bank,” says CEO Vladimir Vukotić. “Well, we are a bank, but a very specific one. We focus entirely on financial inclusion.”
Their employees in Serbia drive from village to village helping enterprising people start a business. They offer a new outlook for the widespread unemployment in rural areas. By lending to small-scale businesses and individuals, 3Bank enables people to advance both themselves and their entire communities.
“In addition to entrepreneurs, individuals can also get a loan from us for lifecycle needs such as education, basic improvements to their home or for a funeral,” says Vukotić. “A funeral costs about 2,000 euros in Serbia, while more than two-thirds of adults have less than 200 euros in savings.” Many Serbs lost their savings during the war years at the end of the last century and have never recovered financially. “Our 7 million inhabitants have one of the highest risks of poverty in Europe, and these are pre-COVID-19 figures. In addition to loans, 3Bank also offers an education programme about savings.
From nothing to something
Visiting every corner of the country involves relatively high costs, while the loan amounts are small—almost always under EUR 5,000. This is enough reason for other banks to ignore remote villages. How does 3Bank manage financially? Vukotić: “We have low infrastructure costs and we focus very sharply on our mission. Most banks do a little bit of everything. My office is simple; I don’t have someone to write my emails. This is unusual in Serbia, where a bank manager is usually treated like a king with a company car, a huge office and great social standing.”
Customers pay relatively high transaction fees. “But if you consider that someone is literally going from nothing to something with our money, then it’s not too bad. A cow brings in 300 euros a month. Without that cow, you have nothing. You then pay 100 euros in transaction fees on your loan, but you can repay it over 15 months. That’s manageable.
3Bank is now ready for the next step: greening. “Since joining the Global Alliance for Banking on Values, I have learned a lot about the effects of climate change. Now that three other members of the GABV have become our shareholders, including Triodos Bank through Triodos Fair Share Fund and Triodos Microfinance Fund, I want to reduce our CO2 emissions with their help. We are starting to investigate how to do this. Things like replacing our customers’ outdated machines, energy efficiency … but for a customer in survival mode, solar panels are very expensive. We’ll keep going a little further, step by step.”*This article has been created with information facilitated by Triodos Investment Management. Read the full interview on their website.