Example from the Financial World : Characterless Managers

Example from the Financial World : Characterless Managers

From Barclays to HSBC  to Bank of England, (See cases below) we see management and managers shaken up by  a moral deficiency. This is a dilemma of managers having skills, competences but inherently flawed  character.   

Character is about responsibility, compliance, sensitivity and integrity.   Banking is about trust. Managers need to earn respect  from the public at large particularly as stakeholders repose faith in them.

All those seem 'bookish' to the 'street smart' bank manager of the 21st Century.

Managers  need to be role models. Subordinates look up to them as examples. They need to be worthy of emulation. Managers symbolize organizational culture. They are expected to lead through examples. 

Bank managers have professional standards and ethical norms.  They have codes of conduct. All that vanished into thin air. 

In the pursuit of profits, and self aggrandizement, financial managers seem to show patently anti-social behavior. There is an element of criminality when you fix rates even as the World at large thinks that the rates are all market determined and fair. The rigging of foreign exchange rate  or of interest rates all indicate that criminal minds may have entered banking and finance with the intent to deceive the innocent.

Managers have twisted  markets to earn profits through deliberate mis-perceptions. In that process, managers have lost the moral authority to direct or control. Management by such indulgence is self-destructive. Managers, when they decide that  ethics might not be so necessary in the growth urges may be laying the seeds for misfeasance.  

  

So what are the key values that we must instill in our MBA  graduands? The key values that should frame  managerial thinking...

1.      Earn and retain respect

2.      Socially responsible,

3.      Integrity.

4.      Self-control.

5.      Self-direction.

6.      Compliant and Just.

7.      Equity.

8.      Trust

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 (Case 1) London Inter-Bank Offered Rate (LIBOR) was a yardstick which was developed by the regulators and the Bank of England. The Libor priced the loans made to mortgages and commercial loans. Normally around midday every day the bank tried  to set a fair assessment of the interest rates by obtaining quotes from some big banks, some medium-sized banks and some small banks. This was under the approval of the Bank of England. The bankers then added up the numbers and divided by the number of participants (ranging from 7 to 14) and that was Libor. The Libor rate is the benchmark for loans, mortgages and products in the financial world which run into trillions of dollars. Barclays fixed these rates at various centres, in various deals and through a host of traders.  Barclays managers lied.

(Case 2) HSBC paid a $ 1.9 billion to US authorities for not adhering to regulations on money laundering. HSBC violated sanctions in bank with violating sanctions laws by doing business with customers in Iran, Libya, Sudan, Burma and Cuba. HSBC   has reportedly been helping customers avoid taxes.

(Case 3) Lloyds Bank sold insurance products to people who did not need them or would be ineligible for them.

(Case 4) Deutsche Bank's former CEOs are reportedly accused of lying and attempted fraud and lied in testimony to German judicial authorities.

(Case 5) Bank of England has invited investigations by Serious Fraud Office in regard to liquidity auctions it made in 2007 - 2008.

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The above are excerpts from a forthcoming book by the Author