Back in November of last year Bob Diamond, the chief executive of Barclays, delivered the inaugural Radio 4 Today Business Lecture. This is part of what he said:
Soon after the financial crisis of 2008 I was at a meeting in Washington with a group of US senators. While I was there, a senior economic adviser at the White House put a question to me.
“Do you think banks can be good citizens?” he said.
I wanted to answer yes, but before I could reply he said: “If the answer is “yes”, think about the fact that no-one will believe you.”
I did think about that – I have thought about it quite a bit over the past three years.
I want to use this opportunity tonight to share with you my views on why the answer to that question must be “yes”; it’s because the single most important thing for banks and for businesses now is to focus on helping to create jobs and economic growth; and being able to do that requires us – banks in particular – to rebuild the trust that has been decimated by events of the past three years; and that rebuilding trust requires banks to be better citizens.
I believe in this passionately.
For me becoming a better citizen means three things:
First, it’s about how we behave, especially with our customers and clients; second, it’s about what we do, and in particular how we help those customers and clients create jobs and economic growth; and third, it’s about how we contribute to the communities we serve in many other ways.
We want to put things right. But we know it’s not enough just to apologise. We have to try to make sure that things like that don’t happen again.
In part that comes down to culture.
It’s a very personal thing, but throughout my career – from my time as a teacher, to my time as a banker – I have seen just how important culture is to successful organisations.
Culture is difficult to define, I think it’s even more difficult to mandate – but for me the evidence of culture is how people behave when no-one is watching.
Our culture must be one where the interests of customers and clients are at the very heart of every decision we make; where we all act with trust and integrity.
But it’s not just about how we behave towards our customers and clients. It’s also about how we work together with our colleagues, because if you have to deliver for customers with 150,000 colleagues around the world, as we do, you better be able to work as a team.
As far as I’m concerned, if you can’t work well with your colleagues, with trust and integrity, you can’t be on the team.
To the question “can banks be good citizens?” the answer must be “yes”. But I’m mindful of what was said to me three years ago: “Bob, think about the fact that no-one will believe you.”
We’re in the early stages of working to restore trust.
I’d like to be able to say we’re achieving that, but I know that for you, seeing is believing.
Reading these words in the light of Barclays’ massive £290 million fine that came from its traders lying to make the bank look more secure and increase profits during the financial crisis, they seem pretty hollow. Even though the public’s confidence in bankers and the banking system is at rock bottom, this news has been treated with widespread amazement if the huge reaction on Twitter is anything to go by. This mutual disgust is in part due to the only outcome other than the fine being Bob Diamond and three other executives giving up their annual bonus.
Martin Taylor, the former chief executive of Barclays has described this as ‘systematic dishonesty’ blaming the culture of the organisation for allowing this to happen.
Unsurprisingly, the call is growing for Bob Diamond to resign but also some of the papers and politicians are calling for those involved to go to prison. This is a very valid point. What has been committed is fraud and if the bank escapes further punishment it will reinforce the public perception that bankers can get away with more or less anything without any consequences affecting them and their pay packets. Maybe some bankers so believe this, but either way banking now has an even bigger and messier hole to dig itself out of.
What we’re seeing yet again is the way that money and greed can drive those working with it into corrupt practices. The temptation to go beyond the laws and regulations set in place is too great for some to handle. Bob Diamond said that “the evidence of culture is how people behave when no-one is watching.” Well I’m afraid Bob if the culture of your company’s investment arm is reflected through the way some have behaved when they thought no-one was looking, then you’re in charge of a rancid den of iniquity. Not exactly something to be proud of.
If Bob Diamond truly wants to restore the public’s belief that banks can be good citizens, giving up his bonus is a start, but there’s a long, long way to go from there.
The Bible has so much to say on this that it’s hard to know where to start. It has plenty to say on dishonesty in commerce and not deceiving people. It has an awful lot to say on wanting too much money and desiring it over more important things in life. Jesus said that it’s harder for a rich person to get into heaven than for a camel to go through the eye of a needle because he completely understood how selfish living life with money as the focus can make us. If you live to gain riches it’s almost impossible to give them up for something else. The apostle Paul sums things up well:
Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evil.
Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment. Command them to do good, to be rich in good deeds, and to be generous and willing to share. In this way they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life. (1 Timothy 6:9-10, 17-19)
It’s too much to expect bankers en mass to change their ways by putting their hope in God, but if Bob Diamond really and truly wants to do what he was talking about in his lecture then he needs to create a culture where giving becomes as important as taking. I’m not saying that Barclays should give their all their profits away, but they do need to be seen to be contributing something much more positive and substantial to society beyond paying tax.
Last year fundraising and payroll giving by Barclays staff generated £63m of community investment which was matched by the bank. There are plenty of people at Barclays who are decent and generous. The bank’s £63m of giving may sound impressive, but as a proportion of their £5.9 billion profits in 2011, in works out at about 0.1%. That’s not a lot. In comparison, our government gives 0.55% of GDP in aid. Even if Barclay just doubled their giving it would make a big difference without noticeably affecting their profits. If more of those who get big bonuses were involved in philanthropy so much good could be done. Having a culture where ripping off customers is not tolerated in the slightest should be expected to be the norm. Following on from the Payment Protection Insurance scandal earlier in the year, today we now find that banks have been mis-selling insurance to small businesses. We shouldn’t have to be pleading with banks to create a culture where dishonesty and manipulation results in sanctions and appropriate punishments rather than cover-ups. If they can’t see that for themselves then what hope do we have of them becoming good citizens?
Terry Leahy the ex-chief executive of Tesco and one of the most respected businessmen in this country recently said this:
“Morality is very important in business. You can’t be in business or run a business and leave morality at the door. I had a Catholic upbringing in Liverpool. Those morals should guide the strategy and the behaviour of the business. The challenge with moral relativism is that in business one of the most useful guides is to do the right thing, but if you don’t know what the right things is or if everybody’s got a completely different version of the right thing, it’s not such a useful guide.”
Barclays has again shown us that the moral codes employed by some in the banking industry are in a complete mess. Knowing what the right thing is might be obvious to most of us on the outside but it seems to have been all but lost in the bubble of investment banking.
I can’t see how Barclays are going to change their ways if their chief executive isn’t able to execute the very things he says are needed to win the public over. Tinkering at the edges won’t achieve anything of significance and being forced to improve by the regulators doesn’t demonstrate a commitment to do what’s needed. If Bob Diamond seriously wants to see banking being respected he could do a lot worse than picking up a Bible and learning the Biblical principles of handling money well.
It shouldn’t be surprising that God knows what’s best for us. Barclays needs a moral framework that will prevent the continuation of these scandals, but as long as those who have become slaves to money are deciding what is morally acceptable rather than looking to be guided by something more trustworthy then we can only expect more disheartening news of corrupt practice further down the line.