Lloyd Blankfein, the chief executive of Goldman Sachs, once famously said he believed banks were doing “God’s work”.
Now, the Netherlands is going one step further: starting later this year, all 90,000 Dutch bankers will have to swear an oath that they’ll do their “utmost to maintain and promote confidence in the financial services industry. So help me God”.
It’s part of a major attempt by regulators and banks to clean up after the financial crash of 2008. Just last October, the big Dutch co-operative bank Rabobank paid a $1bn (€730m) fine to settle charges in the Libor rate- fixing scandal.
Board members of the banks have been required to swear the oath since last year, but now it’s being expanded to cover everyone who works in the sector. It consists of eight statements, including promises not to abuse knowledge and “to know my responsibility towards society”.
There’s also a new banking code, a special declaration of moral and ethical conduct that all board members are required to sign, a “treat your customer fairly” initiative, and a “suitability” test for executive and non- executive directors of supervisory boards.
Bankers who fundamentally object to God’s name can instead pledge: “This I declare and promise.”
The Dutch Banking Association, which is behind the move, says it is still developing the disciplinary procedures and sanctions for bank staff who are found in breach of the pledge.
According to an annual survey conducted by consultant Ronald Pont, public trust in Dutch bankers has dropped from 92% in 2008 to 34% today.
So will swearing an oath make a difference?
“It’s ridiculous,” says René Tissen, a professor at Nyenrode Business University in Breukelen, who jokes the pledge should be called “the Bernanke oath”.
“People wonder whether bankers will ever adhere to it, in the light of the culture of self-enrichment. There’s a deep distrust.”
It’s easy to mock the initiative. Yet the Dutch have a point in identifying the fundamental problem. While there has been a slew of regulatory initiatives across Europe to shore up balance sheets — the latest being a new round of stress tests by the ECB — there has been little action aimed at curtailing the sort of “Wolf of Wall Street” attitudes that have been rife on trading floors and, at times, in executive suites.
The question is, of course, whether it can be effectively enforced. “Regulation of behaviour is a pretty big ambition,” says Ben Boyd, head of the corporate practice division at Edelman, the global PR company that publishes an annual trust barometer. Banks once again come out at the bottom of the heap in the 2014 survey. Boyd says what will change behaviour more than anything are strong leadership and clear motivation, especially when it comes to compensation packages.
The Dutch have already put in place sanctions for top executives, even as they decide on how to deal with less elevated bankers.
Take the new “suitability” rules for supervisory board members, which came into effect in 2012. Last year the Dutch Central Bank and the Authority for the Financial Markets announced that nearly 10% of the supervisory board members of the four largest Dutch banks and insurance companies failed these suitability tests, and were either released from the posts or prevented from accepting an appointment.
Would moral safeguards have prevented the 2008 meltdown? Probably not. The Netherlands was badly hit; as well as having to nationalise Fortis, the government injected capital into the biggest bank, ING, and insurer Aegon. A parliamentary inquiry into the rescue efforts in 2012 concluded that the government had made major mistakes in its handling of the crisis.
Professor Tissen says the only way to restore trust and avoid another meltdown is for banks to be split up. Above all, “people want transparency that’s easy to understand. They’ve turned against globalised finance. They want banks cut down in size,” he says.
Still, in a country with deep Protestant roots, a little God-fearing can’t do any harm. And, who knows, it may just do some good.
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