The Tyranny of Numbers

Criminal bankers, interest rate spikes & mythical holidays

I assume we will be seeing bankers in court, as UK Chancellor George Osborne is set to implement a reform suggested by the Parliamentary Commission on Banking Standards, namely introducing a new criminal offence: “reckless misconduct in the management of a bank”. Pandering to populism, it is aimed at capturing bank CEOs and directors.

But should not our new, state-of-the-art regulatory system be in the dock right now? The prosecuting lawyer would surely argue there was “reckless misconduct in the supervision of a bank” when the Co-operative Group’s bank was rescued …

Read More

Where power now resides

Banks & the three p’s: press, public and political opinion

Guests at the Lorünser Hotel in Zürs pay the equivalent of the value of a “small car” for their stay, in the words of a former senior partner of Freshfields Bruckhaus Deringer, a prestigious international law firm. Yet the hotel, built in 1927 in the Austrian Alps, lacks the glamour associated with the Palace Hotel in Gstaad or the Grand Hotel du Cap in Cap Ferrat.

What distinguishes it is the combination of the gemütlichkeit atmosphere, excellent service and unchanging guests. The same families stay during the same weeks every …

Read More

Reputation loss: Rato, Mervyn and Dimon

The growth myth

If raw capitalism is about creative destruction, we have undoubtedly seen a lot of destruction. It is not yet clear how creative it will be.

On the back of the financial crisis there was a first wave of people such as Dick Fuld of Lehman Brothers and Sir Fred Goodwin of Royal Bank of Scotland.

We are now seeing the second wave. Mervyn King has lost his reputation as a competent governor, although he won’t lose his job. The Governor’s consistent refusal to commission a study of what went wrong at the Bank of England; a series …

Read More

Bank governance: rejecting the check list

Morality and psychopaths

We all have a guilty secret. Confession is good for the soul, so in this post-Easter period, let me come clean about mine. It happened in the spring of 2008.

Shamsad Akhtar, the outstanding governor of the central bank of Pakistan at the time, was under attack from the government and her reappointment for another three year term looked uncertain. In an attempt to bolster her position, while I was on a visit to Karachi, she insisted I interview her on Pakistan state television. For 40 minutes we were filmed discussing monetary policy, provisions for bad loans, …

Read More

Germany thanks the southerners

Saudi investment opportunities

Angela Merkel today gratefully acknowledged the southern European contribution to the euro. “Without the incorporation of those sunny southerners, the euro would be the deutschmark. It would have reached Swiss franc levels, ruining our exports,” she stated, while munching on sardinas at the opening of the Museum of Greek Siestas & Tax Evasion. “Instead, we have this delightfully devalued deutschmark, which has allowed our trade surplus to reach a three year high.”

As she flicked the tail of her flamenco-inspired suit, she thanked Germany’s fellow members in the EU and the Eurozone for being responsible for nearly …

Read More

New era regulators and a passionate conversion

How tinkering may ruin bank boards

Take a look at the Financial Times, where Robinson Hambro authored an editorial on the Financial Services Authority and its excessive interference in the running of the boards of banks.

Or read the article in the text below:

The passion of the convert is a frightening thing. Be it former smokers who cast glances of derision at office staff puffing away on the pavement or, more specifically, the regulatory backlash on the back of the financial crisis, converts allow little room for a nuanced approach.

One hopes that the government will allow for a …

Read More