Major Banks in the US and UK are now facing charges that they
conspired to rig the London interbank lending rate (LIBOR).
The process came under scrutiny in June 2012 when Barclays
announced that it had submitted false information to keep the rate low.
The list of banks allegedly involved in these latest charges
range from the US giants Bank of America and JP Morgan and in the UK includes
Barclays and RBS.
Together with Switzerland’s UBS and Rabobank of the Netherlands
these four banks have already paid US$ 3.6 billion to settle US and European
regulators charges of rigging.
As more evidence of bad practice emerge from the banking
industry it reinforces the comments made by the UK Parliamentary Standards
Committee on Banking Standards who stated - "too many bankers, especially
at the most senior levels, have operated in an environment with insufficient
personal responsibility.
"Senior executives were aware that they would not be
punished for what they could not see and promptly donned the blindfolds.
"Where they could not claim ignorance, they fell back on
the claim that everyone was party to a decision, so that no individual could be
held squarely to blame - the Murder on the Orient Express defence."
It is fair to say that had the focus been on the needs of
customers and shareholders as opposed to the size and division of the bonus
pot, we would not have witnessed the various calamities which befell the Banking
system with all the attendant fall out.
It is not unusual for senior management to be detached from the
business they purport to run.
From my own personal experience I have worked in trading
environments where totally unrealistic profit targets have been passed from
Board level to trading departments. No cognisance having been given to the
disproportionate risks which need to be taken to achieve these targets.
One factor common to all of the issues is
that the most spectacular financial disasters have always followed a period of
ostensibly highly successful trading.
No comments:
Post a Comment