Much of the post-crisis hate for Wall Street has been focused on fat-cat investment bankers, Ponzi-scheming hedge fund managers and traders who use inside information to get one over on mom and pop. But not enough hate is spewed at those underhanded retail bankers, a new study suggests.
The research, conducted by Cass Business School and New City Agenda, focuses solely on the U.K., but certainly there are some common themes and behaviors that speak toward a global culture of banking.
First, the good news. Banks do now comprehend the “toxic” work culture that has been created within the industry and are committed to change. The bad news is that they’ll need another generation – or two more decades – to fully rid themselves of the aggressive retail sales culture that helped destroy economies, the report found.
“One of the many tragedies of the financial crisis was seeing so much hard work, talent, and ingenuity directed towards such selfish and often immoral ends,” the authors wrote.
So it’s more the culture than the actual people, the report suggests. Banks fostered a widespread “sales culture” that rewarded staffers for selling financial products that didn’t take into account the needs of customers or the bank’s long-term health. Think mortgages, insurance products and savings accounts, many of which helped only the seller.
Part of the reason for the misdeeds, which have resulted in billions in fines, came from the pressure applied by retail banking management. Here are two quick anecdotes, both very British and vegetable-oriented in nature. One bank would routinely hold a “Cash or Cabbages Day,” which is a lot like what it sounds. You hit your sales target, you get a cash bonus. If you miss, you receive an embarrassing head of cabbage.
At another bank in Glasgow, young tellers had cabbages and cauliflower placed on their desks. They could only pass the vegetables on to other employees until they opened a new account. Apparently the negative connotation of produce is a big motivator over in the U.K.
The report details several other cases of putting sales targets ahead of helping customers, including routine meetings where cross-selling strategies were discussed before even sitting down with and understanding the needs of customers.
That culture has yet to be fully stamped out yet, the report suggests, but banks are working on it.
10 Ways to Break Into Banking in Your 30s (eFinancialCareers)
Can you achieve a career change into banking when you're more than 30 years old? Yes, if you follow this advice.
More Trouble at HSBC (WSJ)
U.S. authorities are looking into whether an HSBC employee leaked confidential client information to New York hedge fund Moore Capital Management.
Barclays Eyeing Asian Resurgence (Bloomberg)
While mostly firing in the West, Barclays is doing plenty of hiring in the East. It has added 11 people to its Japanese equity sales and trading team since July and plans to hire at least four more by the end of the year.
Despite Wage Gap, Women Better Savers (Bloomberg)
While the average female worker makes roughly 25% less than men, employed women are much better at putting that money to work. Female workers contribute as much as 12% more to their 401k than men with similar salaries. Still, the average 401k for men holds $108,800 compared to just $73,100 for women simply due to the wage gap.
BofA Names New Class of MDs (Financial News)
Bank of America has promoted 59 new managing directors across global corporate and investment banking and global credit and transaction banking, plus another 54 within its markets division.
The Good and Bad at Jefferies (WSJ)
Stuck in the mud for a month following the drama involving Sage Kelly’s divorce proceedings, Jefferies took part in a Wall Street Journal piece on its cash cow: healthcare advisory. Long story short, they’re still dominating, according to CEO Richard Handler, taking on 28 new deals since Kelly took leave. They only problem, as the piece points out, is that Jefferies tends to work on smaller deals and charges lower fees. The firm is clearly in growth mode, however.
At Least Know His Name (FT)
How do you know when a bank has a spotty risk culture? When the CEO doesn’t know the name of its chief risk officer, even when he is sitting right next to him. Former Merrill Lynch Chief Executive John Thain was the guilty party on that one.
Buzz Around the Office
In Russia, The Plane Rides You (Siberian Times)
The weather in Siberia was so cold a plane actually froze to the ground. Always a resourceful people, the 70 Russian passengers got out and pushed the 30-ton plane until it was in a position to take off.
Quote of the Day: “Real men can plant a tree, build a house, and push a plane.” – one of the Russian passengers