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Posted by on Mar 6, 2009 in Economy | 2 comments

A Beautiful Young Princess on Banking and the Financial Crisis

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When I was a teenager living in the Netherlands in the 50s, the reigning monarch was Queen Juliana of the Dutch Royal House of Oranje-Nassau.

In 1980, her daughter, Beatrix, became Queen of the Netherlands. She is still the reigning monarch.

Since moving to the U.S. about 50 years ago, I have not kept close tabs on the Dutch Royal family.

Therefore, I was quite surprised when I read the following headline this morning in the Dutch newspaper, the NRC Handelsblad: “Dutch princess Máxima holds banks responsible.

I was surprised, first, because I did not know who Princess Máxima was—where she fitted in the Dutch royal lineage.

Second, I was surprised because it was my naive assumption that young Dutch princesses would not jump right in the middle of such “heavy” financial debates.

As to my first “surprise,” Princess Máxima is a very attractive Argentinean native—her maiden name is Máxima Zorreguieta—, now married to the heir of the Dutch crown, Prince Willem-Alexander.

She is thus the wife of the future King of the Netherlands. (Prince Willem-Alexander will be the first male monarch in the House of Oranje-Nassau in over one hundred years)

As to Princess Máxima’s qualifications to engage in a national (perhaps even international) financial discussion: she has a very good background.

According to the Handelsblad:

Before Máxima met crown prince Willem Alexander ten years ago, she worked as a commercial banker in New York for banks such as Deutsche Bank and HSBC.

Over the past three years Máxima has served on a UN advisory group for microfinance: the issuing of loans to poor people or starting entrepreneurs in developing countries.

And, did I mention that she is the wife of the future King of the Netherlands?

Having established her credentials, at least in my mind, let me now address what Máxima had to say about those banks.

Princess Máxima spoke earlier this week at a gathering of bankers, organized by Triodos Bank in the Dutch town of Zeist.

The occasion was the marking of the founding of the Global Alliance for Banking on Values, an alliance of twelve financial institutions focused on social banking* and microfinance, including Triodos Bank.

According to the Handelsblad, these are some of the remarks made and subjects touched upon by the Princess:

Princess Máxima had nothing good to say about her former colleagues, bankers who have plunged the world into a deep financial crisis. She spoke of how bankers had lost sight of the core values of their profession. With ‘overzealous marketing’ practices they sold inappropriate loans to vulnerable consumers who did not know what they were getting into. The financial crisis was due in part to these kinds of practices. ‘Only now we are starting to have some insight in the real extent of the consequences of the last months,’ the princess said.

The essence of banking, says Máxima, consists of trust, building long-term relationships and offering financial products that have added value. ‘Neglecting these values seems to be at the heart of the causes of the crisis.’

She appealed to governments to set up a ‘light touch but adequate system of market regulation’ and to offer consumers financial education, so that they can better understand the financial products they are offered. ‘It is the role of banks and microfinance institutions to have consumer protection and transparency written into the DNA of their organisation,’ Máxima said.

She ended her talk with a call on banks to go ‘back to basics’. ‘Back to the traditional banking activity of acting as an intermediary between the saver and the borrower, back to a strong relationship between the customers and the financial institution that serves them, and back to a thorough assessment of how much a customer can really handle as a loan.’ These basics have been absent the last few years, Máxima said. She voiced her support for the new alliance of socially responsible banks.

Someone needs to invite Princess Máxima to speak before a gathering of our illustrious U.S. bankers who have gotten their institutions, their customers, their shareholders and our country in such a horrible mess.

* Note: According to the Handelsblad, “The model of social banking distinguishes itself from conventional banking by not being led by shareholder value, not espousing a bonus culture, and not getting involved with structured financial products. The twelve participating banks showed on average 24 percent growth per year over the past years.”

Photo: Courtesy of “Het Koninklijke Huis

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