If you want investment bankers to hear you on the issue of cultural change, you need to “shout louder”, according to Sir Gerry Grimstone, the new deputy chairman of Barclays, and if you want to continue to work for the bank – or stay in the City – you are advised to listen.
Anyone who flaunts the behavioural standards expected of bankers in the current age, needs to be “individually accountable.” Not only should they lose their jobs if found to have broken the rules, but they should lose their right to work in finance at all, said Grimstone.
Speaking at the FT Banking Standards Conference this morning, Grimstone said that anyone who can’t abide by the cultural standards expected of bankers in the current era “shouldn’t be working for us, nor any other firm in the City”. It’s not enough simple to levy ever bigger fines on the banks, he said, but transgressors should be “visibly punished and dismissed from the City”, he said during a panel discussion with Lord Blackwell, chairman, Lloyds Banking Group and Antonio Simoes, chief executive, HSBC Bank.
It’s a week of soul-searching for the UK banking sector following the implementation of the Senior Managers Regime this week and an increasing number of senior banking figures speaking up for the need to regain public trust and make the whole idea of being a ‘banker’ something that people should be proud, rather than ashamed of. Much of this, admitted the speakers, was fuelled by the pre-crisis remuneration structures in banking, which fuelled excessive risk taking.
Bonuses were still not seen as a dirty word, however, particularly in highly-paid ‘City’ roles, but rewarding people is necessary, they said.
“We do not want to pay our staff a penny more than it takes to retain the best staff,” said Grimstone. “If we could wave a magic wand and cut salaries across the City we would do this. But what would happen if we did this unilaterally tomorrow is that we won’t be a global bank in London and London won’t be a global financial centre.”
Bad behaviour in investment banking was primarily fuelled from the “bottom up” said Antonio Simoes, chief executive, HSBC Bank and “one, two or ten bad apples” were largely responsible rather than mistaken direction from the top, he said.
Grimstone said that you have to “shout louder in investment bankers’ ears” to get them to listen to you. “When I was a managing director you told staff what to do and they did it. Those days have to come back.”
Investment banks are now all about instilling a culture into which their employees should buy into wholeheartedly. Clare Woodman, global chief operating officer for institutional securities at Morgan Stanley, said that banks need to keep a close eye on how their employees behave. “You need to nurture culture. If you don’t nurture it, it evolves and it evolves away from you.”
Grimstone, who was appointed as deputy chairman of Barclays in November, said that when he started out in investment banking 20 years ago, the whole idea of a conference on banking culture would have been ridiculous.
“Culture was associated with the South Bank,” he said. “Banks ceased to be intermediaries for clients and became principals seeking profits for their own advantage.”