How to do PR for banks
Big banks — at least in Europe — are putting on a new, highly branded, and more contrite face. Â Barclays is embarking on something it calls âProject Transformââ; Deutsche Bank has announced its â2015+â strategy and is pushing for what its CEO has called âdeliberateâ âuncomfortable changeâ. UBS has its own 2015 strategy, and the head of its investment banking unit publicly proclaimed that the industry has become âtoo arrogant, too self-convincedâ.
Should we buy any of this? William Cohan, for one, isnât a fan of Barclays CEO Anthony Jenkinsâs ânew moralityâ. Cohanâs right to point out that all of this hat-in-hand talk comes after a long period of transgression at Barclays:
Among other indiscretions, the good folks at Barclays manipulated the London interbank offered rate, shredded unflattering reports about the U.S. wealth-management division and, according to British authorities, may have fraudulently loaned money to Qatar to invest back in the bank to help Barclays avoid a government bailout in 2008.
Cohanâs definitely not thrilled by Barclays naming Hugh âSkipâ McGee, a former Lehman exec, as the head of its corporate and investment banking division in the Americas. Changing banking, Cohan argues, means holding bankers âfinancially accountable, up to their entire net worth, when things go wrong.â
Of course, we all know that no bank CEO is going to do this kind of thing willingly — and bank shareholders probably wouldnât ever force this kind of revolution. But in order to dismiss the new European attitude to banking as merely an exercise in branding, as Cohan does, you also have to believe that the message doesnât really matter.
Itâs impossible to put a value on bad press, but contrast Europeâs banking rhetoric with the way US banks handled PR post-crisis. Itâs not hard to remember how prominent bankers helped draw their own caricatures. In 2009, Lloyd Blankfein declared Goldman Sachs was doing âGodâs workâ and made stumbling, irritated defenses of during Â Senate hearings. Goldman spokesman Lucas van Praag openly ridiculed the financial press. In 2011, Jamie Dimon, not one to bite his tongue, called new Basel rules âun-Americanâ and seemed to describe foreclosure as an act of mercy. As result, Goldman and JPMorgan arenât companies to most of us now, theyâre The Squid and the Whale.
After a financial crisis that the GAO says took some $22 trillion out of the US economy, US banks have lost nearly every battle in the messaging war. Last summer, Americansâ confidence in banks fell to a record low. In a recent Bloomberg poll, 60% of investors said they werenât confident or just âsomewhat confidentâ that banks were taking appropriate risks; 29% said big banks should be broken up. And those are investors — former bankers like Sandy Weill and Phil Purcell have already jumped on the break-up-big-banks bandwagon.
None of this is to say that banks could somehow stop all bad press by saying the right things — or that big banks should be excused for things like manipulating Libor. Still, it canât be a bad idea to take a leaf out of the European banksâ book, acknowledging that public opinion exists and that relating to the public actually matters. Cohanâs often good at criticizing bank culture, but it seems gratuitous to write off Barclays public self-flagellation and multi-year plan before it starts.
Thereâs a corollary to the public opinion problem for banks: the market opinion problem. Big global banks these days routinely trade well below their book value — the investing public simply doesnât believe their financial disclosures or is waiting for the next big scandal. Whether itâs purely, partly or largely spin, we should be applauding when big, complex and frustratingly opaque banks at least sound like theyâre trying to get us to believe them.