Gross mismanagement and bad loans have caused an operating loss of $8.3m at the "Ökobank," an environmentally- and socially-conscious bank founded in 1988 by a group of 12,000 investors.
Disclosing an audit of its finances, Ökobank said the brunt of the loss, or $6m, was caused by last years bankruptcy of an environmental construction company and two recycling companies. Ökobank said the audit uncovered another $2.3m in bad loans for this year, bringing the bailout sum needed to keep the bank afloat $8.3m.
The accounts of some 33,000 Ökobank customers were in any event not threatened by the financial woes, the bank added.
The uncovering of bad loans left Ökobanks management with no alternative but to admit to "gross mismanagement" and announce its resignation. Oliver Förster, outgoing Ökobank executive, explained that in an effort to expand its business quickly, the bank financed projects "which were risky and which we couldnt control."
Ökobank said the $8.3m capital injection, which it intends to get from its shareholders, would suffice to keep it afloat and actually "return the bank to profitability next year."
In exchange for being bailed out, the bank has pledged to be more careful about making large loans, avoid risky projects and demand more guarantees for its loans.