Yesterday in San Francisco, a new kind of bank opened its doors. New Resource Bank is a small commercial bank established with the sole mission of serving the particular needs of green entrepreneurs and sustainable businesses. Founder and vice-chairman, Peter Liu, has a career history at the top levels of large, global banks Credit Suisse and Chase Manhattan. He's joined on staff and amongst the investor circle by other heavy-hitters in the banking world who are seeing an opportunity in the tremendous and growing wave of green enterprise, especially in California.
Joel Makower recently wrote about the Bank at his blog, sharing a bit of conversation he had with Liu prior to the bank's opening about the circumstances that motivated the beginning of this endeavor a few years ago.
While venture capitalist and pension funds were investing untold millions in clean and green technologies, there was little action from banks, the most conservative end of the capital chain. "Oftentimes there are boxes that banks put things in, and they haven't created a box for 'organic' or 'renewable,' where they can understand the credit needs of these businesses," Liu recently told me.
For example, he explained, a developer of small local renewable energy projects might have trouble getting funding from conventional banks, or even local community banks. "They may understand real estate, but they don't understand that there are other things that can have cash flow, like energy projects," says Liu. "These can have a similar credit profile as real estate, so if a banker took the time to understand the security and soundness of the project, it's more likely to get financed than comparing it to land or a house or apartment." The same is true for producers of organic meat and produce, which cost more to produce but which garner higher prices in the marketplace. Bankers may miss the big picture -- seeing only the higher-cost side of the equation and basing their calculations accordingly.
New Resource Bank is not just about the enviro side of business; it's also about service to the local community. They will offer a customized banking system that appeals to small and mid-sized businesses.
As a chartered and FDIC insured bank, New Resource Bank serves its community broadly, including businesses that are not "green." Small and mid-size business clients in particular, favor the bank's customized service, nimbleness and quick decision making. When opportunities arise, the Bank also plans to actively promote "green" ideas to these clients. As an example, the bank's senior vice president for construction and real estate recently took conventional developer clients to the West Coast Green building conference to expose them to new green building options. ...The bank has a good network to draw upon to make such connections. Among its 240 founding investors are national green building experts, clean tech venture capitalists and even the former president of the Organic Trade Association.
Obviously the bank's staff already knew a thing or two about this green building thing. To top off their whole-picture approach to establishing a 21st century banking model, the New Resource Bank building itself complies with LEED certification standards, incorporating extensive recycled and rapidly renewable materials, low-energy consumption lighting and HVAC, and paints and adhesives that have low fumes and no toxins.
With the Bay Area being a hotbed for bold experiments in applying sustainable principles, San Francisco is certainly an apt place to give this model a go and see what happens. With such a high concentration of enterprising green-minded individuals in the area, it's bound to get the response it needs.
