Is the Ethics of the Banking Industry Changing?

This week RTA Business has seen something that has shocked the entire business community; a bank boss turned down his year-end bonus. Small as this may be, does it indicate a shift in the way the banking industry, and the business sector as a whole, views its ethical responsibility?

Various news sources including the BBC have reported that Barclays Chief Executive Anthony Jenkins decided to turn down a bonus totaling £2.7 million. Jenkins cited costs the bank is currently paying in order to deal with its past problems as well as its £6 billion fund raising efforts as why he turned down the bonus.

Jenkins released a statement on the issue that said that “2013 has been a year of considerable positive change for Barclays, and I am particularly proud of the progress we have made in starting to rebuild trust, in defining and implementing a common culture, in repositioning the business for the future, and in significantly improving our balance sheet.”

He continued by saying that “while all of these actions are in the long-term interests of our shareholders, I am aware of the very significant costs which have been required to address legacy litigation and conduct issues in 2013, as well as to exit assets and businesses we no longer wish to participate in.”

He concluded by saying that “when combined with the substantial rights issue we completed in the autumn, I have concluded that it would not be right, in the circumstances, for me to accept a bonus for 2013.” Jenkins in fact has turned down a bonus which he is entitled to for a second year running, and this could indicate something about the way the banking world is changing.

Banker’s bonuses are seen as a key component in the development of the 2008 economic crash. However bankers have notoriously been reluctant to give them up and even in the last few months we’ve seen reports of bankers still taking exorbitant bonuses, especially since the economic recovery became a reality in the minds of the British public.

So on the one hand the culture is certainly alive and well, yet Jenkins is a pioneer. All popular movements, whatever industry you are in, are started by ideas. The fact that Jenkins has set the example and been roundly praised by the media and public could incite a trend as banks seek to facilitate their image to a public who still distrust them.

It could even say something about changing attitudes to business. The bankers’ bonuses were seen as a contributing factor to the crash and now we’re in recovery nobody in the business world wants to jeopardise that. Maybe those in the industry will realise that if we want to avoid a repetition we need to be making changes like this.

At the moment RTA Business realises that this all conjecture; however it’s a debate that the UK business community needs to be having. How can the industry change the way it acts to ensure that 2008 never happens again?