Some thoughts on Barclays and Vickers
As a behavioural change consultancy that specialises in helping leaders to shape their business around common culture and shared values, one or two of us will have been looking on from afar at the events in the banking world over the past few days with the thought that “the banks really need us!”.
For the public, the LIBOR scandal is further evidence for the established story of corrupt, money grabbing investment bankers lining their own pockets at everyone else’s expense. ‘You just can’t trust these people’ we’re told, their malign influence seeming to threaten confidence in the whole system. Commentators are beginning to question whether in large commercial banks the rogue element of aggressive investment bankers will always triumph over the supposedly staid and meek retail bankers – a rotten apple that spoils the whole barrel.
The Government’s response has played to this narrative with Cameron committing at this week’s PMQs “to legislate to split the banks as Vickers suggested”.
I’m in no position to judge whether the Vickers solution of ring fencing retail banking provides the structural resilience found lacking during the financial crisis; but the storyteller in me worries that it’s a bit like asking a divorced couple to continue living in the same house. It might be tolerable, even practical to start with, but it’s difficult to see how it’s healthy for either party in the long term.
The Vickers recommendations are a response to the problems that caused the crisis, but banking and financial services are so critical to the UK economy that both retail and investment banking operations also need growth stories. There needs to be a light at the end of the tunnel, a vision that keeps the fantastically clever, hardworking people of the City getting up and going to work in the morning while the rest of the country looks down their nose at them.
If you accept the analysis that retail and investment banking are essentially two different businesses – one an essential public utility, the other a global, innovative game of high finance – then perhaps they need to go on two separate journeys. How can you create a bank where both cultures flourish? We hope we’ll get the call, but will we be talking about one story or two?