The Time To Stop Banker Bashing

As Sir David Walker says in his City Sage interview in the April/May FW, “By far the greatest challenge facing the banking sector is to restore confidence and trust.”

He notes that banks are being “forced to tick stricter regulatory boxes, rather than doing the right thing because it is right.”

Speaking at a recent conference on Finance & Society organized by The Institute for New Economic Thinking, IMF Managing Director Christine Lagarde went further, saying “We need to build a financial system that is both more ethical and oriented more to the needs of the real economy – a financial system that serves society and not the other way round.”

These and other similar expert observations point to the compelling need to change the culture of the financial sector.

That is why we should react cautiously to the clamour, most recently heard from the newly elected Conservative government, to stop the banker bashing.

We cannot deny that strong banking and finance are essential for a healthy economy, but wealth creation is not an end in itself.

While responsibility for the financial crisis cannot be laid totally at the door of the financial sector, we must acknowledge that a highly unbalanced risk/reward system contributed significantly to it.

We cannot deny that the finance industry still has some way to go to demonstrate it is chastened.  Too often still, the most vocal contributions to the debate about the future of finance from financiers themselves are complaints about bonus caps and unnecessary regulations, or indignation at being held to account for aiding tax evasion and unfair penalties for market rigging.  There are still too many excuses about not being able to know what is going on in too complex organisations.

Although we must give credit to many financial institutions that are clearly trying to change for the better.  They are improving corporate governance, introducing greater transparency, looking to sustain longer-term results and encouraging their people to do what is best for their customers.

So while we can stop bashing the bankers, allowing them to get on with making the changes to culture that are required, we must not stop holding them to account and allowing a return to business as usual.

Patricia Hamzahee

Integriti Capital