Banks continue the soul searching in search of boring credibility

In a speech to The Scottish CBI, Lloyd’s banking chief António Horta-Osório took another step to redefining banking culture. In his new model, boring, is a virtue alongside trustworthiness and transparency

Speaking to the Scottish CBI, [September 2012] Mr Horta-Osório argued that:

The banking industry has done itself no favours. Issue by issue and scandal by scandal, the faith and trust in our industry has been eroded. The industry must change. We must recast the banking model … retail and commercial banks should be simple and they should be boring.

His own bank is moving away from bonus schemes which have been seen as encouraging mis-selling, and focused too much on sales targets. In future, pay will be “increasingly linked to the long-term performance of the bank … and capable of being clawed back where decisions turn out to have damaged the bank’s performance or adversely affected customers”.

Such a customer-orientation is becoming more widely-accepted. Yet more than rhetoric is needed. Bob Diamond was calling for better citizenship before he was forced to resign from Barclays.

Actions not rhetoric

Mr Horta-Osório outlines practical steps he is introducing to move towards such a culture so that past mis-selling such as Personal Protection Insurance schemes [PPIs] will be “proactively” addressed [not waiting for legal claims to arrive]. However, he stops short at the other current candidate for change, the splitting of banks into lower and higher risk corporate identities.


We reported earlier on other unusual aspects of Horta-Osório’s recent career. The Telegraph [in December 2011] also commented on his return to work from a stress-related illness.

The Telegraph article pointed out that he had recently purchased a holding in Lloyds equivalent to 600,000 ordinary shares, for $226,962 (£146,606). Is this to be taken as a signal of support for his Bank, or a self-interested gesture?

This is not intended to challenge Mr Osario’s competence or his integrity. He has waived his most recent bonus arguing it was unacceptable in the current financial circumstances But it does illustrate the difficulties arising when we seek to explain the behaviours of our leaders in black and white terms, and their nature as heroes or villains.

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