Banks should be run by bankers to avoid future disasters

There is hardly a bank that has not been the focus of scandal since the collapse of 2008

Share

A friend of mine is a head-hunter, responsible for finding likely people for top banking jobs. Two weeks ago I asked him how business was.

Working flat out, he replied, rattling off three or four bank posts he was trying to fill. I was impressed – these were kingpin roles. But he pulled a face. Trouble is, he said, there were few serious candidates around; he was struggling to put up decent names; the pool he was dealing with was so small. The problem was that while there are plenty of bankers, coming up with one qualified and untainted in any way by events of the past five years that would prove acceptable to investors, politicians, media and the public is proving incredibly difficult.

There is hardly a bank that has not been the focus of scandal since the collapse of 2008. It used to be the case that among the big British players, Standard Chartered was in the clear – highly thought of, most of its business in the Far East, its senior executives in demand elsewhere. Then it was hit by claims of laundering money for Iranians and had to pay $340m to settle.

HSBC? Like Standard Chartered, it was not party to the great bank rescue. But then its Mexican operations were found to be a ready conduit for the drug cartels and it was fined a record amount by the US authorities. Barclays? It, too, was famously immune from the bailout but later was revealed to have only escaped the Treasury lifeboat by allegedly bribing wealthy Arab investors to give it their backing, and a group of the bank’s traders was accused of manipulating Libor.

I could go on. Try it for yourself: try and pick a well-known bank or a leading banker who is not touched in some way by accusations of product mis-selling, rate fixing, making dodgy loans, possessing overweening ambition causing customers’ funds to be put at risk.

Give up? Now you know why the same tight crop of individuals is always being suggested for every appointment going. Following Sunday’s exposure of the Rev Paul Flowers, former chairman of the Co-op Bank, for buying hard drugs, including crack cocaine and crystal meth, that list has just got smaller.

The sad truth about the Rev is that he ticked all the right boxes – bar one. He was made chairman of a bank, but freely admitted to not knowing much about banking. You would think that we’d been here before, notably with Matt Ridley, an environmental journalist, being appointed as chair of Northern Rock, Andy Hornby, of Asda, becoming group chief executive of Hbos and Fred Goodwin, an accountant by training, taking over Royal Bank of Scotland.

All those appointments ended in disaster. 

Earlier this month, Flowers’ ignorance about his sector was highlighted before the Commons Treasury Select Committee. However, while MPs picked him up on the statement that his bank’s assets were £3bn, rather than the correct £47bn, his lack of expertise was previously well-known within his own organisation and had even been flagged up by the external regulator.

Indeed, so marked was its concern that the Financial Services Authority remarkably had proposed to the Co-op when he became chairman in 2010 that Flowers should be assisted by two deputy chairmen with banking experience.

The FSA has a lot to answer for in relation to Flowers’ arrival at the summit of the Co-op Bank. Its complacency, in the face of numerous bank collapses, is shocking.

But then, as with Ridley, Hornby and Goodwin, we did not shout either. We’re content for our banks not to be managed by bankers. Then when they fail, we scream they should be run by bankers.

Meanwhile, the number of bankers we’re prepared to trust gets ever smaller. If the system is to change, we have to ensure our banks are led by proper, qualified bankers and we must begin to trust bankers again.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Account Manager

£20000 - £35000 per annum: Recruitment Genius: This full service social media ...

Recruitment Genius: Data Analyst - Online Marketing

£24000 - £35000 per annum: Recruitment Genius: We are 'Changemakers in retail'...

Austen Lloyd: Senior Residential Conveyancer

Very Competitive: Austen Lloyd: Senior Conveyancer - South West We are see...

Austen Lloyd: Residential / Commercial Property Solicitor

Excellent Salary: Austen Lloyd: DORSET MARKET TOWN - SENIOR PROPERTY SOLICITOR...

Day In a Page

Read Next
RIP Voicemail?  

Voicemail has got me out of some tight corners, so let's not abandon it

Simon Kelner
A sculpture illustrating the WW1 Christmas Truce football match in Liverpool  

It's been 100 years since the Christmas Truce, but football is still changing the world

Jim Murphy and Dan Jarvis
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there