For some time now I have been asking myself why the world’s leading bankers have still been unable to talk directly to the masses in order to apologise for their role in creating a financial crisis in which so many people suffered and commit to doing their best in order to avoid the same thing happening again. Continue reading
Posted in Banking, Business, People
Tagged ABN AMRO, Anglo Saxon, Banks, Controls, Culture, Employees, Goldman Sachs, Governance, Human, Investment Banking, managers, people, strategy, UBS
The following is the third in a series of articles on bank risk culture. The previous articles can be accessed on the blog here.
In the previous articles we argued that it is futile if not impossible to separate the risk culture of an institution from the other aspects of culture within it. This article further develops this assertion by looking at some very specific examples of how banks got into trouble during the subprime crisis and why, in each case, only focusing on risk culture would have been totally inadequate.
In a January 2009, The Economist wrote an article on Citigroup entitled “A House Built on Sandy”, a less than veiled reference to the bank’s former CEO Sandy Weill and its troubles during the financial crisis. The article did not pull any punches and here are just a few of the statements it made: Continue reading
Posted in Banking, Business
Tagged bank, Citigroup, Culture, Financial Crisis, institution, Investment Banking, Merrill Lynch, Organisation, RBS, Risk, Risk Management, Subprime, TBTF, Too Big To Fail, UBS, Wall Street
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
Posted in Banking, Business
Tagged ABN AMRO, asset management, Banks, Business, Customers, economy, Financial Crisis, Investment Banking, markets, Risk, TBTF, UBS, Values
The past few weeks have witnessed several instances where shareholders have rejected executive compensation packages proposed by bank boards. Is this the dawn of a new era in corporate governance?
Many years ago when I was Business Manager to the Global Head of Treasury at ABN AMRO, the unit submitted its bonus request for that year to the director responsible for the investment banking unit. When he saw the size of the request his acerbic response was; “so what about the shareholders”.
It would appear that shareholders around the world are now beginning to ask the same question. From one bank to the next shareholders are venting their displeasure at the size of executive compensation plans—forcing management to revise their payouts.
Posted in Banking, People
Tagged ABN AMRO, Bank of America, Banks, Barclays, Bonus, Business, Citigroup, Dodd Frank, Executive, Financial, Government, Management, Pay, Shareholders, Subprime Crisis, UBS