Deutsche Bank is the last heavyweight contender. While the other European investment banks — Barclays, UBS and Credit Suisse among them — retreat to retail and private banking amid investor discontent and a regulatory squeeze, it is doing the opposite. It wants to become more like Goldman Sachs, not less.
Stuart Gulliver’s crisp explanation this week of why he once held his annual bonuses in a Swiss private bank account via a Panamanian company was plausible yet somehow more puzzling than if he had been evading tax.
I am angry with Stephen Green. I am angry in part because HSBC’s former chairman (now Lord Green) presided over a financial institution where, it turns out, oversight was so distant that large-scale tax avoidance schemes could be peddled by a Swiss subsidiary, in breach of, at the very least, the spirit, if not the letter, of good banking.
Money laundering is when someone channels the cash from robbery, fraud or expropriation into a Swiss bank account, or an expensive apartment in Manhattan, to make it look clean. So what is the term for sullying profits from legal enterprise with tax evasion and shenanigans? Money staining, perhaps.
“Even if the truth is more complex than the headlines, re-establishing confidence in and respect for the banks will be a journey up a steep mountain.”
Stephen Green – now Lord Green – has not commented on the leak of files exposing tax-avoidance practices at HSBC’s Swiss-based private bank. But in 2009, the then chairman of HSBC put his whole philosophy of ethical business on the record in his book Good Value, sub-titled “Reflections on money, morality and an uncertain world”. The newly topical quotation above is an extract. Read more
Goldman Sachs caused a bit of a stir this week by issuing an analysts’ report suggesting JPMorgan Chase might want to break itself up. I believe in the independence of investment bank research as much as the next person, but it is hard not to notice that the major beneficiary of such a step would be Goldman Sachs.
Ana Botín has wasted little time since becoming chairman of Banco Santander in September, last week appointing a new chief executive. Like Abigail Johnson, installed as chief executive of Fidelity in October, she worked hard for her job, but it is inescapable that both are members of founding families. For women lacking a birthright, the route to the top in financial services is tough.
After the spectacular chaos of the last time that regulators and governments scrambled to rescue banks in the US and Europe, they have hammered out a plan for the next time. It is better than the absence of one in 2008 but who knows if it will work?
The implications, opportunities and challenges of increased longevity are beginning to dawn on many companies, as our Silver Economy series is revealing. But here is one that I don’t believe chief executives have yet focused on: the increased risk that your predecessor, and possibly his predecessor’s predecessor, will still be around to snipe at your strategy. Read more
Technology has its eyes on banking. Apple is expected this week to launch Apple Pay, its touchless payment system for iPhones; venture capital funds are pouring money into “fintech” start-ups; and Marc Andreessen, the technology entrepreneur, talks of “a chance to rebuild the system. Financial transactions are just numbers; it’s just information.”
Mark Carney © Photo by Chris Watt – WPA Pool /Getty Images
Mark Carney, governor of the Bank of England, would not win a popularity contest among directors of banks at the moment. Yet he and the Bank are taking a stance on individual responsibility that most people think is long overdue. Read more
If I ever rise to become chief executive of anything and I’m looking for yes-men to people my boardroom table, I shall make sure I employ a bunch of merger and acquisition bankers.
At the end of every quarter, to coincide with the publication of M&A rankings that they yearn to top (while professing indifference), these bankers boast about the fullness of their pipelines, the strong prospect for strategic deals, and, implicitly, the promise of more fees. As the illustration below shows, their outlook is at its rosiest-tinted just before a downturn.
In spring 2001, for instance, as deal volume plummeted, the esteemed Simon Robey, then co-head of M&A at Morgan Stanley, pointed out that “the fundamentals of the business have not changed, so when markets stabilise, we should see announcements of deals that are currently in the pipeline”. A truism, of course, but deals did not recover their 2000 peak until 2006. (A partial hall of shame of retrospectively regrettable M&A banker quotes appears at the bottom of this post.)
On Thursday, Scotland may set out on the bumpy path to independence from the rest of the UK. Its banking system is likely to work only if it is braver and more far-sighted than Alex Salmond, the Scottish National party leader, during the campaign.
Every time I hear about a company relocating its headquarters I think of the Marvin Gaye song “Wherever I Lay My Hat (That’s My Home)”. A hit for Paul Young in a 1983 cover version, its hummable melody cloaks an unattractive sentiment, voiced by someone with dubious motives.
The other day, a business in New York mailed a dollar cheque to me across the Atlantic. It was a pretty thing – multicoloured, with an anti-fraud foil hologram – and I admired it for a while before putting it into another envelope and posting it back to a friend in New York to walk up the block and deposit. After a round trip of 7,000 miles, it reached my account three weeks late.
While waiting in a big Manhattan hospital about 15 years ago, I glimpsed the chairman of one of the world’s biggest banks in a consulting room. I never found out why he was there. If he was ill, his employer never said and the man is now enjoying a long and apparently healthy retirement.
Given that financial crises are caused by herd-like behaviour by banks, it is hard to know whether to be encouraged or dismayed by the latest mass shift – away from investment banking and toward retail and commercial banking.
The Bank for International Settlements annual report, published today, finds that one-third of banks that entered the financial crisis in 2007 as wholesale-funded or trading institutions switched to retail banking by 2012 (19 out of the 54 in its sample). Read more
No-one emerges well from the legal battle between Goldman Sachs and Deeb Salem, its former mortgage trader who claims that his $8.25m bonus for 2010 amounted to severe underpayment. It is no wonder that Goldman tried to seal the documents in what it calls an “utterly ridiculous” case.
The problem for Goldman and other Wall Street firms is that they have encouraged that sense of entitlement among employees – one that strikes almost everyone outside Wall Street as delusional. Mr Salem’s claim is merely an extreme example of a much wider problem.
Presumably, although he denies it, Brady Dougan considered resigning as chief executive of Credit Suisse this week when it became the first global financial institution since Crédit Lyonnais in 2003 to plead guilty to criminal felony in the US. In any case, he stayed.