Monthly Archives: June 2012

Barclays LIBOR Storm Clouds

The LIBOR problem will spread well beyond Barclays and once again banks are being asked serious questions about their values and their culture. What next for the industry?

The manipulation of the LIBOR rate by Barclays and other banks is about to set-off another major crisis within the banking industry. There appears to be no question about the bank’s guilt as Barclays have actually admitted wrongdoing and have applied to the EU for whistleblower status.

For all the negativity that will be thrown at them in the coming days and weeks, that action on the part of the management is actually quite commendable. If you disagree then I suggest you look at the number of times banks have been caught doing wrong and pay large fines but at the same time refuse to admit any wrongdoing. Continue reading

TBTF Means TBTM (Too Big To Manage) Part III

Banks that are too big to fail or TBTF are by definition also too big to manage or TBTM. In Part III of the series we look at the role played by customers in this phenomenon. The link for Parts I is here and for Part II here.

In Part II of TBTF Means TBTM we looked at how the belief that the markets are a zero sum game has created a banking culture obsessed with the size of a bank’s market presence and to what extent it can exert dominance. Allied to this philosophy and in many ways intrinsic to it, has been an approach where banks have strived to become all things to all customers.

All things to all customers by definition imposes a requirement on banks to offer all products or at the very least as many products as possible. For a number of different reasons this does not make any sense. Foremost amongst these reasons is the fact that it is highly unlikely that a single institution can be proficient in all products.

The following anecdote illustrates the point. Continue reading

Clearing The Bull on the Financial Crisis

A book on the financial crisis everyone can read and understand what bankers, regulators and politicians have been up to.

I am very happy to announce the formal launch of my new book Clearing The Bull: The Financial Crisis and Why Banks Need a Human Transformation

In plain and simple language it explains what actually caused the financial crisis, how history keeps repeating itself, why the current solutions are all wrong, and how we can create a better more sustainable industry.

Kindle / E-book prices are highly competitive at £2.63, $4.07, €3.14. All versions of the book are available here:

Amazon.com
Amazon.co.uk
Amazon.de
Amazon.ca

Enjoy!

TBTF Means TBTM (Too Big To Manage) Part II

Banks that are too big to fail or TBTF are by definition also too big to manage or TBTM. In Part II of the series we look at the role played by the growth of products and markets in this phenomenon. Part I can be found here.

What is it about the industry that makes banks so susceptible to becoming TBTM or too big to manage? As noted in Part I, egos and megalomania do play a significant part. However, they are definitely not the whole story.

For many bankers, performance is synonymous with size. Bankers take it as gospel that the greater their share of a particular product market, the greater the profits to be earned from that market. It is obvious that such a proposition does not necessarily hold true.

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TBTF Means TBTM (Too Big To Manage) Part I

Banks that are too big to fail or TBTF are by definition also too big to manage or TBTM. What does this tell us about the state and the mindset of senior management in our major banks?

In a 2009 article entitled A House Built On Sandy (Sandy, meaning Sandy Weill, the main architect of the modern Citigroup) The Economist describes the decline of Citi in terms which are less than flattering. The following extracts tell the tale:

“TOO big to fail, too shit to buy” is the way some Citigroup insiders describe their employer… Acquisitions were poorly integrated. Cultures overlapped rather than melded)… It may be inevitable that some banks are too big to fail; but the lesson of Citi is that they can also be too big to manage.

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Author Challenges Popular Assertions of Financial Crisis

Press Release from iUniverse – Jonathan Ledwidge argues root causes of subprime mortgage crisis have not been addressed

LONDON – In his book Clearing the Bull: The Financial Crisis and Why Banks Need a Human Transformation (published by iUniverse), author and banker Jonathan Ledwidge argues that the 2008 subprime mortgage crisis was, from beginning to end, a human crisis which resulted from a poor system of values. He maintains that as long as that poor system of values remains in place, the world financial system remains at risk.

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