Years ago when assigned to cover a Bank of Ireland agm, I was charmed to find that we were looking at a “court of directors” rather than a regular old board. Bankers have always used different language to distinguish themselves and their activities from say, your local supermarket. When caught with their hand in the till, instead of calling it a rip-off – entailing lies, bullying, lost homes and ruined lives plus the destruction of trust in an essential social and economic pillar – they talk about “cultural failings” and “improving on customer focus”.
Eleven years on from the crash, they still talk about the struggle to get out of “firefighting” mode and the need for more diversity to get rid of the groupthink (Note: to the end of 2017, men had been appointed to nine out of 10 of the most senior and influential roles in Irish retail banks). And yes, they still talk about that risky tendency to “groupthink”, eight years after Peter Nyberg featured it heavily in his report.
I was never sure about the usefulness of the term. It suggests that bankers were just a wee bit thoughtless and excitable in a teenagery way.
So there’s no harm in recalling how they – and our political masters – wilfully missed the thunderous indicators that led up to that disaster.
In December 2005, when a steady stream of statistics from the Central Bank showed that we were living beyond our means, Ireland had been named the second most indebted country in the EU and we owed about €2.1 billion on credit cards (half of which were being repaid monthly by only the minimum amounts), I set out to reconcile this with the crazed Christmas queues in Brown Thomas. It made no sense.
‘Irresponsible lending’
A spokesman for Mabs – the Money Advice and Budgeting Service financed by the Department of Social and Family Affairs – remarked that more than a third of Mabs clients were coming from the middle-income bracket whereas 13 years before, 90 per cent of its clients had been on social welfare.
A summer 2005 report by IIB (since rebranded as KBC) and the Economic and Social Research Institute (ESRI), based on a survey of personal debt, suggested that even then, one in five borrowers – about one quarter of a million – were finding their debts to be a heavy burden.
All that and more appeared in an article in January 2006, under the headline, “The Irish are the EU’s second most indebted people. Is easy credit a liberator or a disaster waiting to happen?”.
Three years before that, David McWilliams was telling Prime Time that “today in Ireland the price of the average house is close to 10 times the average wage . . . Behind this nonsense is excessive and irresponsible lending from our financial institutions.”
All these alarms were flashing many years before Lehman Brothers filed for bankruptcy but it just didn’t suit the banking culture to heed them. What has changed?
Legislation is also promised – sometime – to make senior executives accountable for their actions
Regulation got serious with legislation and new bodies to quell any determined backsliding. The Protected Disclosures Act, passed in 2014, gives whistleblowers a range of sturdy protections against employer reprisals. Legislation is also promised – sometime – to make senior executives accountable for their actions.
Senior banker ‘culture’
Yet exhaustingly, there is still this “culture” in banking that must be tackled, we are told. So this week the five big banks showed willing to chide themselves by launching the Irish Banking Culture Board (IBCB), headed by a former Court of Appeal judge. It also includes the head of Ulster Bank and senior executives from AIB, Bank of Ireland, Permanent TSB, and KBC Bank. How likely are they to drive the kind of turnaround that puts people before profit?
We are told that the IBCB will not fix the problem “overnight” but we already knew that. Such is the dissonance between senior banker “culture” and ordinary folk that, at the height of the tracker revelations, a vigorous campaign was being waged to restore executive banker bonuses. Imagine your supermarket management team trying that on in the face of a major horseburger scandal.
At the height of the tracker revelations, a vigorous campaign was being waged to restore executive banker bonuses
There is a sliver of light in this week’s news, contained in an industry-wide survey that, on the face of it, seemed wholly negative. Of the 15,000 bank staff who responded, more than one-third said that in the past year they had wanted to raise a concern about issues related mainly to their company not acting in the best interests of customers or clients. Worse, two in five or less than half those worried workers felt able to speak up about their concerns; they feared it would be held against them or that nothing would come of it.
Now turn that figure around. Three in five of that 5,000 or so who had concerns about their employers’ values or conduct towards customers had the courage to step forward and speak their minds. That’s about 3,000 bank workers who cared enough about you and me to feel the fear – or the futility – and do it anyway.
It’s not a bad place to start.