In the wake of financial scandals, big banks declare their culture is changing, but critics say genuine reform is easier said than done

Sub-prime mortgages, predatory lending, complicity in money laundering, mis-selling of payment protection insurance, manipulation of interbank-lending rates, excessive charges, and the “London Whale”: since the roof fell in during the 2007-8 financial crisis, the charge sheet listing the banks' crimes and misdemeanours has just kept growing.

The sums involved are eye-watering. Jérôme Kerviel, for example, the former Société Générale trader, racked up €4.9bn in losses from unauthorised transactions by the time he was uncovered in 2008, dwarfing the £827m famously lost by Nick Leeson in the 1995 collapse of Barings Bank. The 2012 losses of JPMorgan Chase trader Bruno Iksil, aka the London Whale, amounted to $6.2bn. Payment Protection Insurance (PPI) mis-selling has so far cost the banks a staggering £22bn.

These losses and the fines levied on banks – such as the $1.5bn paid by UBS for manipulation of the Libor interbank lending rate – divert money that could be used to fulfil the basic role banks should be performing: keeping the wheels of the economy oiled through lending, in particular to small and medium-sized businesses that have the potential to grow and create jobs.

Banks need to refocus on small businesses

Banks are often accused...

This content is premium content, and only accessible to subscribers. Please log in to view the content - or subscribe here.

Subscribe to read: How to achieve cultural change in the finance sector



Already a subscriber? Login using the fields below.

To get access to this content, become an Ethical Corporation subscriber today.

Subscribe and join the likes of:

Subscribe here
Close popup
banking  Ethical banking  Finance briefing  international stock exchanges  Sustainable finance 

comments powered by Disqus