A tax on banks would cost jobs, says finance chief

But City urged to aim for ethical capitalism. By Paul Cahalan

Social responsibility must be "sewn into the fabric" of big business in the wake of the financial crisis, the man charged with rebuilding the City's relationship with the public has said.

But in his first full interview since taking up his post, Ken Costa said the clamour for a Europe-wide tax on the City would cost UK jobs. Instead the City of London should work to help write "the Zeitgeist" for a global ethical capitalism, Mr Costa, former chairman of Lazard International, one of the world's top investment banks, said.

The Cambridge graduate with a masters degree in theology admits the aims sound fanciful, but said they were long-term goals for his work as chairman of London Connections, a St Paul's Institute initiative of the Bishop of London – which aims to engage the City with a disenfranchised public picking up the bill for multi-million pound bank bailouts.

Last week, Mr Costa, 62, made the group's first move by facilitating a meeting between Occupy London protesters, who are demonstrating against capitalist greed, and Financial Services Authority chief executive Hector Sants.

"It was almost a tale of two tent cities," he said. "I met 300 guys outside St Paul's and then I was doing a speech for Business in the Community (BITC) [a charity that campaigns for all businesses to act responsibly]."

That meeting saw executives from Google, Kingfisher and Lloyds looking at environment impact, social mobility and training those coming out of prisons, "different aspects of business than that is normally associated with a business group" he said. BITC works with about one in four UK firms, an example of a growing acceptance that firms must do more in the community and warm the public to business, he said.

But while there were increasing calls for better behaviour from within the business community – beyond corporate social responsibility programmes there first must be acceptance there is a common issue to address, he said.

Mr Costa, a Christian acting as a poacher turned gamekeeper, is well placed to make that happen. "I talk widely to business and they know I'm still active in banking... The concerns they [executives] are expressing are the concerns you and I would have.

"The key is: how do you create a way of behaving that appears to be sewn into the fabric of a company rather than a loosely attached tassel – which too often mission statements and some programmes are."

He accepts there is still widespread anger at banking practices, but said the wrong move would be a Europe-wide [Tobin] tax on transactions, which would come at a "massive cost to jobs in this country" and be unsuccessful as businesses would move to non-taxed areas.

But far from letting banks off lightly, he said they still had a lot to prove to win public trust after multi-billion pound bailouts. "It is one thing to turn from the things you have done wrong and it is another to walk the path that is right."