Banks: Too private?
When a chairman or chief executive appears on ³ÉÈËÂÛ̳ television or radio, he or she is typically talking to millions of people in the UK and across the globe via our assorted programmes and channels and platforms.
That’s appealing to a minority of business people, such as of or of . Their visibility, they believe, sends out a strong message of confidence in their respective businesses to their customers, employees and shareholders.
Other executives are more reclusive, they cherish their privacy – which is understandable.
It’s part of my job to persuade them they have a duty to be accountable, via the ³ÉÈËÂÛ̳, to the many different groups which have an interest in their respective companies.
As the power of global companies is perceived to be increasing, it is arguable that those who run them have a greater responsibility to explain themselves in public forums.
Even if a chief executive insists on sticking to the traditional view that it’s only shareholders that really have the right to put him or her on the spot, those shareholders are the many millions of us via our pension funds.
And in an era when media is fragmenting, there are few more public spaces than appearing on the ³ÉÈËÂÛ̳.
That said, broadcast interviews are scary – especially if it’s not just the interviewee’s reputation which is at stake, but that of a big business with thousands of employees and subject to brutal competitive forces.
However those who have fought to the top of big organisations are normally pretty good at presenting themselves and dealing with difficult questions. For all the anxiety of business people about appearing on TV or radio, I can’t think of a single one who has been damaged by the experience in the two and a bit years since I joined the ³ÉÈËÂÛ̳.
There are times when I am genuinely surprised by the reluctance of executives to appear on television or radio.
For example, the chief executives and chairmen of almost every bank refused to do interviews with any broadcaster over the past few weeks when each bank was disclosing its respective financial performance for the previous year.
It was a big moment for all of them, because of the massive swing in their fortunes caused by the credit crunch.
I had assumed that – on the Stuart Rose model – they would want to appear on television and radio to reassure their customers and shareholders at a time of high anxiety.
I was wrong: , , and all said no.
Their senior executives were happy to talk off-camera or away from a microphone. They were happy to be intermediated by me. But they didn’t want you, the viewer and listener, to hear their voices and see their faces.
There was a notable exception: , chief executive of , gave a to me which went out on TV and radio.
I think that reflects well on Barclays – but I have a vested interest in thinking that.
What are your views on all this?
I asked a couple of bank bosses why they and their teams were being so shy.
The reason they gave was that conditions in money markets remain exceptionally difficult, the confidence of bankers remains fragile, and the outlook for their businesses is hugely uncertain. And in those circumstances they and their executives have to weigh their every word with care.
Given that they can’t yet predict all the consequences of the unwinding of years of excessive lending, they are fearful of talking to millions of people through a medium (viz, the ³ÉÈËÂÛ̳ or any broadcaster) they can’t control.
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Robert,
Perhaps they have something to hide at present and we already know that they don't like good journalists.
You will find them all at Cheltenham today in the company of many politicians and the other hurrah-henry's, whilst the more important real wealth generators are still at work.
Robert I think you are correct, I think in troubled times a strong leader should be standing up tall and straight for all to see to help people not to set into panic mode.
Now more than ever, there is a need for a few "promise making presentations" from the big guys at the top. I understand they may not have much to promise - but even if its simply
"things may look bad but we promise to keep everyone informed and be as open as possible - there are things hapenning we cannot control but as an organisation we have the top people in place to respond with strength.. blah blah blah"
maybe i should be a politician - but then maybe i am TOO open/honest ;-)
good blog - thanks
I despise banks for the power and influence they have over our society.
They are so crucially intrinsic to the functioning of day to day life that they simply cannot be allowed to fail, no matter how many mistakes they make.
The greed of bank executives has pushed our financial system to the brink of collapse - in fact, it should have collapsed by now, only being propped up by anxious govt's who can see the general pandemonium that would ensue if banks were allowed to fail - and still yet the greed with which these banking men have undone their own institutions will be rewarded with government bail-outs.
I used to think we lived in a democracy, but of course, it's a sham. Granted, we are luckier than starving Africans, but ultimately the majority of us are just meal-tickets for global finaciers to get fatter, without any recourse to their disastrous dealings.
It's not easy to admit - in public - that your business is finished.
The Inconvenient Truth (to coin a phrase) is that we have now seen "Peak Credit", and it is downhill all the way for credit institutions /intermediaries from now on.
Having said that, there is no reason why banks should not reinvent themselves as "service providers" no longer putting their shareholders' capital at risk by creating credit based upon it but instead:
(a) MANAGING the bilateral "peer to peer" creation of credit, backed by mutual guarantees, and provisions made into a "default fund"; and
(b) bringing investors together with investment (aka "Investment Banking").
This outcome is essentially Keynes' "International Clearing Union" approach at Bretton Woods, which was rejected in favour of a mathematically unsustainable deficit-based banking model.
Disintermediation is becoming more and more pervasive anyway irrespective of "Peak Credit" and is the logical consequence of the continuing process of Internet-based "direct connection" I think of as "Napsterisation".
eg www.zopa.com is a way of allocating EXISTING credit "peer to peer" but does nothing to create NEW credit, as banks do.
There are - believe it or not - simple solutions available to this "Credit Crash" (it's a lot bigger than a "Crunch"), but they require a recognition by banks that their business model is finished: that realisation is probably upon them, but the last thing you would expect is for them to say so on ³ÉÈËÂÛ̳.
The reluctance of the Banks CEOs to be interviewed shows a lack of business acumen..
Shareholders should be concerned that their man at the top is hiding away ,at a time when he should be using all his energy to reassure people that he is steering the ship through troubled times.
The problem is deep rooted,management of banks has always ,been seen as untouchable ,distant and shrouded in secrecy.
The men currently appointed to oversee their banks continue to maintain this image .
It is time for change ,I agree with Robert Preston.
Stands to reason that at this difficult cross roads in the economy that there are many uncertainties and the last thing they need is an alarmist journalist such as yourself trying to make them look silly.
Perhaps, Robert, you should remember their apparent reluctance to speak.
When at sometime in the future they contact you you can then deny them the 'oxygen of publicity' to put their spin on events.
But anyway, their reluctance shouldn't come as too much of surprise really - the ex-CEO and Chairman of Northern Rock both 'went to ground' at the first sniff of trouble.
They all appear to be happy to accept the financial rewards of their positions without accepting any of the responsibility for their corporate decisions when things get 'a bit sticky'.
Robert, have you not reflected at all on the media's role in the credit crunch? Surely these bank CEOs sensibly realise that the last thing they need is to give televised assurances to the general public that all is well. There would be too many shades of Adam Applegarth's repeated public appearances and interviews. It is unclear to me what you are trying to say: if you think we should be panicking, why don't you say so directly, rather than resort to this slippery sort of comment?
There is an accepted precedent that any bank boss doesn't make a public statement about his/her company prior to a major financial statement just as they are precluded from either buying or selling the company's shares.
It would not seem wrong to accept that given the first responsibility is to shareholders and investors they are given any pertinent information before anyone else.
However given all precedents have been covererd it is inexcusable for them not to go public via any media particularly when their respective companies are in the public domain.
Perhaps their reluctance is because they are not briefed properly about what they are ultimately responsible forand this would be immediately apparent to any viewer. Alternatively the sublime belief that the director in charge should be answering questions doesn't hold any sway either.
If the man/woman at the top is only going to control the monthly board meeting and occasional sub committee ones then why pay them so much or give them the credit they seek or believe they deserve.
If the man/woman at the top is not au fait with the workings of the bank or other company they are clearly the wrong people in the job.
The bottom line in my view is that these folk are undeniably accountable and responsible for their companies well being and respect so to allow them to get away with a 'no comment' is totally gutless, irresponsible and more importantly morally wrong.
The problem is of course that they cannot justify their behaviour and so don't want to be put in a position where they might be asked to.
Robbie,
come and interview me. I am more than willing to talk to you. I work in Banking. Let me know when you get to Newcastle...
I think it's entirely understandable for anyone to be reluctant to be interviewed by the British media, given that we all constantly see politicians (who can't choose not to be interviewed) getting the rude Paxman/Humphreys treatment, and routinely being portrayed as crooks, liars and incompetents. The media, and the ³ÉÈËÂÛ̳ in particular, seem naively unaware of the influence they have - I blame them squarely for the low esteem in which politics is currently held; why should bank bosses want to suffer the same fate?
A desperately short-sighted approach on the banks' part, but you gave the reason for it in your final paragraph: they can't predict the consequences of the unwinding of years of excessive lending.
Or to put it another way, over-bonused suits who sprayed billions around the globe didn't fully understand what they were doing.
I don't think I'd want to be interviewed in those circumstances, either.
Company executives' responsibilities to report on the company's performance are firstly to their shareholders (including pension funds) and secondly to their employees.
There are well-established communication routes for talking to both of these groups of people.
Frankly given the increasingly tabloid nature of recent ³ÉÈËÂÛ̳ financial coverage I think companies' senior management would be very unwise to expect the ³ÉÈËÂÛ̳ to give measured and mature coverage of their organisations' performance.
So I don't think there's anything wrong with the status quo.
ready set go peston with the bear stearns analysis...
am guessing Jimmy Cayne won't be answering your calls
The fact is that these people need to start talking!
Hiding in their plush board rooms and offices isn't going to change the mess they're in. In fact the longer these idiots are not held accountable the worse things will get for all of us.
I'll never forget Adam Applegarth on the Friday the Northern Rock run began........
"Things are fine, this is just a temporary liquidity problem, blah, blah blah"
Yeah, right on Adam, just you run off with your sickening pay off. Disgusting.
Robert, you're doing a great job. Some of the best journalism about these days. Please keep it up.
Banks seek to run by spin, they will never remove the 'Shylock' tag because their money grabbing ways have become ever more outrageous. WHo in their right mind would have the courage to face the truth that would be exposed within seconds.
It just shows we have the wrong guys in the job. Congratulations to John Varley for at least trying his best, but shame on the rest for the contempt they show their customers
Banks have an accountability to their shareholders and are given a privileged role in society in return for accepting another accountability to FSA. In turn, FSA is scrutinised by parliament, who we elect.
So if they are already accountable to the public, why should they be accountable to the media? Given the UK media is (with very few notable exceptions) obsessed with short-termism and is averse to balanced reporting it would be dangerous to encourage Bank CEO's to engage with the media in this febrile climate.
I think there is a broader point here. The ³ÉÈËÂÛ̳ does not have a business nose and consistently exposes its weak business reporting when compared to more specialist news services. Bank CEOs don't need soundbite opportunities like retail CEOs do - so can safely ignore the lightweight ³ÉÈËÂÛ̳ coverage. It's sometimes funny but more often annoying to hear ³ÉÈËÂÛ̳ reporters try and formulate sensible questions for CEOs. If you can't ask as sensible question, then just keep quiet and leave the business reporting to broadcasters and agencies that understand commerce.
Banks have an accountability to their shareholders and are given a privileged role in society in return for accepting another accountability to FSA. In turn, FSA is scrutinised by parliament, who we elect.
So if they are already accountable to the public, why should they be accountable to the media? Given the UK media is (with very few notable exceptions) obsessed with short-termism and is averse to balanced reporting it would be dangerous to encourage Bank CEO's to engage with the media in this febrile climate.
I'm often amazed at the ambivalence and reluctance of CEOs to engage with the media. A pervasive assumption is that it is more important from a reputational perspective to meet with analysts. Interestingly, according to some research I've done (you'll find it here: ), analysts will ascribe a more positive valuation to a business if it generates a positive press. CEOs should take heed.
I completley agree with Tom.
If the CEO's could be safe in the knowledge that their comments would not be taken out of context or spun as badly as they are they'd be more willing to have such discussions.
Perfectly illustrated by David's comment. There are implications in the Blog that hint at what is not there.
Hang on a sec - bosses of banks are held accountable by the people that matter: shareholders who can sell if not happy, customers who can walk if not happy and employees who also can walk if not happy. This is becoming a hoary old chestnut now, but, with respect Robert, all that media organisations are trying to do is fill their ever-expanding airtime (as well as hopefully getting the scoop), especially with 24 hour news coverage.
Of course John Varley was happy to talk to you- it's his job- he's the friendly public PR face of Barclays PLC. Now let's see you talk to Marcus Agius...
scamp and MorrisOx are quite right; but for the CEO of a bank, to commit an opinion to public tape is to sign his resignation letter. These men 'fought their way to the top' by bending furthest with the prevailing intra-company wind, and they have learnt not to offer firm opinions as hostages to fortune. That is, of course, unless they are invited to work for the company from outside, in which case the exposure of their obvious ignorance of the business would do nothing for shareholder confidence.
Just because your pension fund has shares in a company, doesn't make them accountable to you personally. they are accountable to the pension fund managers. Even if you own a few shares personally, you are not entitled to grill the chief executive on any matter you like and expect an answer. The argument stands up better if you are a customer. A customer has a right to ask any question he/she wants,before depositing money with a bank for safe keeping. But that's better handled by customer services people, than chief executives.
Banks have an accountability to their shareholders and are given a privileged role in society in return for accepting another accountability to FSA. In turn, FSA is scrutinised by parliament, who we elect.
So if they are already accountable to the public, why should they be accountable to the media? Given the UK media is (with very few notable exceptions) obsessed with short-termism and is averse to balanced reporting it would be dangerous to encourage Bank CEO's to engage with the media in this febrile climate.
scamp @ #9 is quite right; but for the CEO of a bank, to commit an opinion to public tape is to sign his resignation letter. These men 'fought their way to the top' by bending furthest with the prevailing intra-company wind, and they have learnt not to offer firm opinions as hostages to fortune. That is, of course, unless they are invited to work for the company from outside, in which case the exposure of their obvious ignorance of the business would do nothing for shareholder confidence.
#18 Has it so wrong it's totally laughable. The FSA has shown it is run by well meaning folk who have no real time experience and in a word have shwon themselves to be totally incompetant. From Payment protection, critical illness, endowments and now Northern Rock the FSA has proven that they really havent a clue. Is it any wonder large banks and Insurance companies run circles around them.
To suggest that such an authority makes these parties accountable is insane.
The irony is that all the right intentions were there but they have the wrong folk.
Please #18 get real and realise that its all about money and spending on legal fees to protect your interests. The FSA doen't have it and spends its money horrendously. its pension fund is £36 million in debt and it is drawing down on £100 million of arranged debt. Never will so many large firms get away with so much as now. All the FSA is now left to do is pick on the small firm and make the headines suggest something totally different from reality is happening.
Maybe they don't trust you to write an accurate story? Your sensationalism is fuelling concern within the markets because YOU are the face of the ³ÉÈËÂÛ̳, the gold starndard in TV and radio journalism. So if you vary from the trit, or go "off on one" like you did over NR, then that causes all of them a problem. I mean, are you that interested in hearing the honest truths or keen to make a story?
The banking market is a bear at present and is coming under fire from all sides. Banks will always be unpopular with certain sectors of society, but the alternative is that we ALL pay to have a current account, which no-one wants either. Maybe you should blame the halfwits who do a £75k equity release on their house and blow it all on a month's holiday in the Bahamas and a new Range Rover? Those are the real danger men in the Uk economy.
Some stupendously short-sighted responses on here, which I'm sure Bank PR minders will have positively drooled over.
Let's get a few things straight. Banks spend absolute fortunes on marketing and PR, an awful lot of it aimed at making borrowers of all persuasions think they are dealing with seasoned technical experts who are trustworthy with a capital T.
The reality? These are the salesmen who turned mortgages from simple homeloans to arcane investment products and from investment products into financial tsunami.
Peston, let it be said, has done a damn good job rolling back the carpet and allowing ordinary people to gain an insight into what these commercial cockroaches really got up to.
However bad some of you think financial reporting may be on the Beeb it is as nothing compared to the serial dereliction of duty that paraded under the name of investment banking.
Shame on anybody who aids and abets these halfwits in the fight to avoid telling the public just how many souls they sold in the name of a bonus.
Robert,
These really are extraordinary times.
No signs of the bank chiefs as they run for cover in these very difficult times, yet, the biggest chief of all from the Fed, rolls out to reassures us that everything is A OK, shortly after the most eloquent and intelligent President in history does exactly the same.
I smell panic and it is thick in the air travelling rapidly on the wind.
I'm not surprised they're so coy. Like most criminals, bankers don't want their faces on television.
After all, they wouldn't be able to get away with looting and subsequently crashing the economy if we knew who they all were now would they?
The Bush Administration now has its own corporate army (Blackwater). Now his government is bailing out banks.
Will it ever end?
My comment concerns accountability.
Scenario 1: Rail maintenance company neglects basic track maintenance resulting in rail crash injuring several people. Result; Media and MPs clamour for heads to roll, public enquiries, laws on corporate manslaughter, call for better oversight, etc. ³ÉÈËÂÛ̳ aggressively interviews rail company executives causing them to squirm in their seats.
Scenario 2: Banks make disastrous and multiple bad decisions on lending. Result; market turmoil, affects world-wide economy, decimates personal pensions, huge bonuses paid out to City workers, CEOs quietly walk away from the chaos with millions in their pockets, Media and MPs silent on accountability.
How can this be?
How can the greed of the corporate banks be allowed to turn the banking sector from the 'grease in the cogs of world trade' to a rapacious parasite that sucks trade and industry dry and becomes fat and bloated on the work and creativity of the common man? Answer: Weak amoral media (where are you ³ÉÈËÂÛ̳?) and sychophantic amoral government.
Robert,
So nice to see you congratulating yourself on the ³ÉÈËÂÛ̳’s exclusive scoop that was Northern Rock.
The media frenzy that ensued was probably without precedent in recent times. Yes, the business model was a busted flush, but your appalling journalism has not helped in the slightest.
And as Northern Rock now reveals details of the 2000+ jobs that will be lost over the next year, you’ll no doubt be there to pick over the bones of its emaciated carcass.
Hang your head in shame.