Two recent articles highlight for me the importance of culture in banks. Over the last several years compliance departments have grown enormously in banks to address shortcomings in practice. But it is increasingly clear that a bank can never hire enough internal police to prevent problems. Rather banks must develop cultures where all employees know what is right and wrong. And this issue is not specific to any geographic area although it does seem to be linked to large banks with complex operations.
Just one week ago the Financial Times reported on the issue of spying at Credit Suisse. This scandal has been going on for some time and led to a change in the CEO. The Swiss regulator appointed an independent investigator to gather the facts and his report appears to be complete. And if that report does not create enough heartburn for Credit Suisse, the FT article provides a number of additional cases where problematic behaviour by bank staff has been cited. Again indicative of a culture lacking a focus on integrity.
Meanwhile on the other side of the pond, JP Morgan Chase has stated that some of its staff and clients may have abused the Paycheck Protection Program set up to support the US economy during the COVID-19 pandemic. As reported by Bloomberg yesterday, the “New York-based bank said it has seen ‘instances of customers misusing Paycheck Protection Program Loans, unemployment benefits and other government programs’ and that some ’employees have fallen short, too,’ according to a memo to staff from the bank’s senior leaders Tuesday.” Whilst it is important that JP Morgan Chase is pro-actively attacking this issue, the underlying cause of some employees lacking a culture of integrity also needs to be addressed.
