Monthly Archives: July 2013

Banks Desperately Need A Crisis Management Plan (Part 2)

A few days ago I posted an article, which can be found here, setting out why banks needed to up their game in terms of developing a plan to manage the current crisis, otherwise they faced the imposition of regulations and higher capital requirements that would be bad for them and bad for their economies. Well both Barclays and Deutsche just got a nasty surprise. Continue reading

Bloomberg Contributor Predicts Fall Of The Chinese Economy

A Bloomberg article by William Pesek predicts the fall of the Chinese economy based on the fact that the country has embarked on a project to build the largest skyscraper in the world–as did the US, Japan, Malaysia and Japan before it. Continue reading

Banks Desperately Need A Crisis Management Plan

Can you imagine a major industry which suffers a near death experience, angers its entire customer base—wholesale and retail, domestic and international—and yet refuses to publicly apologise and adopt a plan of action that commits the industry to not repeating the mistakes of the past. That is where the banking industry is at right now.

This lack of decisive action on the part of the industry’s leadership will do lasting damage to not only the industry but also to its as yet unforgiving customers and the global economy. Part of the problem is that the industry does not appear to even realise that it is in a crisis—one which has been brought about by a complete loss of public faith in its activities. That is a tragedy. Continue reading

Only Bankers Can Create Great Banks Not Governments Or Regulators

It is impossible for any industry to survive if it relies on the actions of governments and regulators to watch over it in order to make sure that it does not blow itself apart. Yet, this is the precise position in which the banking industry now finds itself. Continue reading

Arab Democracy Will Take Time: That Should Not Surprise Us

The following is the first in a series of articles on democracy.

Many western observers of the Arab Spring are surprised that democracy has not taken hold in internet or social media time. It appears that they have forgotten just how long it took to establish democracy in the west. Perhaps it is necessary to explain, that despite our hopes and expectations, the Arab world cannot achieve a Renaissance, a Reformation and democracy at warp speed. That very same transformation took Europeans several hundred years.

To better understand the nature and consequences of the Arab Spring and other events in the Middle East we need to develop a better understanding of the history of democracy in the region and how it compares to what happened in Europe. Continue reading

The Very Human Side Of Economics

So much of what passes for discussion these days on how to improve economies is centred around GDP growth, debt ratios, tax regimes, the regulatory environment, infrastructure development and corporate profitability. Moreover, when a company announces that it is cutting costs, by laying off workers and closing down divisions, analysts cheer, the stock price rises and commentators laud the good decision. Continue reading

The Commitment That Banks Must Make For A Better Future

The following is the seventh and final article in a series on bank risk culture. The previous articles can be accessed here or by clicking the HOME tab on the blog.

A total meltdown in any industry requires nothing less than a total rethink of the way forward. However, rather than finding themselves engaged in a total rethink of the how and why they must transform their business, banks have been engaged in responding to more legislation and regulation as well as improving their governance and internal controls.

The problem for banks is that neither governments nor regulators can create a better future with great institutions—only bankers themselves can. Continue reading

Banks Have Arrived At A Gazpacho Moment

A few years ago, I went to a reunion of my Cass Business School MBA class. Immediately on seeing me, one of my former classmates started laughing. I was, of course, puzzled and asked him what was so funny. He apologized for his outburst but confessed that, in the past several years, he had, on several different occasions, taken great pleasure in telling some of his friends a joke about me.

I will share that joke with you. Continue reading

Outdated technology could lead to another crisis in banking

This blog has maintained that the lack of proper IT and systems is a major concern for the banking industry. Here is the proof, if indeed any was needed, from the pages of the FT.

Outdated technology could lead to another crisis in banking

The FT goes even further and suggests that the failure of such systems could lead to both a financial and social crisis.

This is why I have always believed that the most important response to the problems within the banking industry is not what governments and regulators can do but what bankers themselves can achieve. Governments and regulators should take heed. IT systems are a major source of risk within banks which no amount of legislation and regulation can remedy.

This is also another example of why focusing solely on the risk culture of banks is simply not good enough–as has been clearly demonstrated in the series of articles on the blog.

Jonathan Ledwidge is the author of the book Clearing The Bull, The Financial Crisis And Why Banks Need A Human Transformation (iUniverse).

Bank Risk Culture: An Alternative View On The Causes Of The Last Financial Crisis

The following is the sixth in a series of articles on bank risk culture. The previous articles can be accessed here or by clicking the HOME tab on the blog.

A total meltdown in any system requires nothing less than a total rethink of the way forward.

Legislators and regulators have blamed the subprime financial crisis on a whole host of issues including derivatives, proprietary trading, deregulation, the collapse of Glass Steagall and the integration of retail and investment banking, as well as the overall failure of risk management and corporate governance. What we have learned so far in this series of articles is that the actual reasons are somewhat different as they relate to the overall culture of banking. Continue reading