Reflection about 'BBC:BANKERS'

Three documentaries about bankers.

NO.1 Fixing the system

The first video is concerned about some problems in the banking industry. Since the global financial crisis in 2008, there are a great amount of crashes and economic upheavals in the financial circle. Investors are becoming less and less trusting of banks and other financial institutions, not only these institutions could seek for governmental support, but also should they have some adjustments to build up their own new cultures and make their consumers believe how great future they could create.

In the London banking industry of United Kingdom, there are three leading banks to manage the whole London credit market, respectively are Barclay's, UBS and Royal Bank of Scotland. Because of the existence of a large number of banks in the London financial market, in order to standardize the market economic order, the LIBOR is created. The LIBOR is widely used as a reference rate for many financial instruments in both financial markets and commercial fields. There are three major classifications of interest rate fixings instruments, including standard interbank products, commercial field products, and hybrid products which often use the LIBOR as their reference rate. Owing to the significance of LIBOR, every member banks are all very concerned about its figure. Ranging from these members, Barclay's is one leading high-street bank, it plays an important role in the credit market and it accounts for a large proportion in the circle of lending and borrowing for each other. In January 2011, Bob Diamond successfully became the Group Chief Executive of the Barclay's and he began to take some changes to the bank. Being influenced by the 2008 global financial crisis, it has become more difficult to raise money and it lacks of reliable mechanism to build up free market principles. Maybe there are too many interests attracting those investors; So being driven by huge profits, the relevant senior banking staffs in Barclay's began to manipulate the LIBOR in order to increase their interests or decrease their losses. 

When the FSA found these illegal messages between staffs and officers, these actions became scandals in the banking industry and contributed to other institutions' benefit infringement. This accident has made a very bad impression on the global financial market and it had lots of damages to the Barclay's, whole economy and banking industry. For this reason, Bob Diamond was asked to attend the parliamentary hearing about LIBOR manipulation. The main controversies related to Barclays bank and its conduct during Diamond's tenure was including accusations of money laundering, tax avoidance and Libor manipulation. These scandals had too serious impact on the future of our credit market and investors are becoming untrusting of banks and banks are losing their past advantages. Ironically, this game-changing crisis erupted over the widespread rigging of an obscure rate-setting mechanism, LIBOR, rather than over the tumult of the financial crash. Some say it took this latest scandal to expose a profit-at-all-costs cynicism that they believe has corrupted the heart of our banking system; all agree things need to change. Former Barclays chairman Marcus Agius, RBS boss Sir Philip Hampton, deputy governor of the Bank of England Andrew Bailey and Jean-Claude Trichet examine the difficult new dilemmas about what we want and need from our bankers, and whether we can trust them again.

NO.2 Risk at all

The second video in this topic tells the story of two recent multi-billion pound trading disasters that rocked the City. It shows that some bankers are still taking reckless risks, five years after the crash that brought the world's economy to its knees. Risk is the engine of growth but reckless risk can have catastrophic consequences, especially in volatile times like the turbulent financial world of today. The film charts the thirty-year effort to manage financial risk through mathematical modeling and shows how this can encourage some traders to behave as if they have mastered risk altogether. With Nobel laureate Daniel Kahneman, former JP Morgan executive Bill Winters and regulator Martin Wheatley.

In the reality, high risk represent the high return, if you would like to take higher risks to investing some portfolios than those Treasury Bills, you could have an opportunity to achieve higher profits. So it is not difficult to understand why those bankers are always preferred to taking reckless risks. Achieving high return is important, but as for the whole world, keeping the economy stable and prosperous is even more important. Therefore, when we become one member of the bankers, we need to take management of risk control into consideration. As a institutional investor, we could reduce our risk of investment according to investment diversification and choosing more types of investment products to be mixed.

NO.3 Payback Time

The film charts three decades of extraordinary changes inside our high street banks. They brought us convenient free banking services, easy credit and paid their way at the centre of the nation's economy. But as bankers now candidly admit, along the way they abused the trust of their customers, and sacrificed long-term relationships for quick profits. The fallout from mis-selling has driven some small business owners into financial distress. RBS chairman Sir Philip Hampton, Lloyds Group CEO Antonio Horta Osorio, the archbishop of Canterbury and Gillian Tett dissect the causes of this banking crisis and ask how such a dysfunctional system can be rebuilt for the future. 

In some ways, bankers are one kind of providers of special services, their credit is fairly important. They need to keep the trust from their consumers and deal with their wealth carefully, taking their benefits into account not only considering their own interest. In a long term, bankers tend to lose their clients gradually. Faced with financial crisis, trying to take some active steps to rebuild the clients' confidence is a better choice in crisis responses. Bankers' managers should take their main responsibilities to follow the crisis answers mechanism step by step. So look, construct a crisis response mechanism is an urgent affair, maybe all the bankers could join it and work together to build up a encounter crisis platform that had better form a normative theory.