“The level of ignorance seems staggering to the point of incredulity. Not only were you ignorant of what was going on, but you were out of your depth.”
Last week senior executives of UBS testified before a British parliamentary panel about their part in the Libor-rigging scandal. What they said sent a discouraging signal that they, and others in the banking sector, are still operating as if they are out of touch and tone-deaf in a sound-proof room.
U.S. and British authorities have implicated UBS, Citibank, Deutsche Bank and Royal Bank of Scotland, among others, in fixing the Libor rate over several years. UK lawmakers, responding to a public outcry, set up the Parliamentary Commission on Banking Standards to look into the UK banking sector’s professional standards and culture; discover lessons to be learned about corporate governance, transparency and conflicts of interest; and clarify the implications for regulation and government policy.
Andrea Orcel, chief executive officer of UBS’s investment bank, told the committee that “the whole executive board and board are very focused at recovering the honor and the standing that the organization had in the past.” But that’s still putting the emphasis and focus on the wrong thing. What these institutions need to be thinking about is rebuilding trust and stability. Using phrases like “recovering the honor” sends the message that they are focused on themselves and not on the effect their actions have on those around them – their clients, the employees and the global financial system.