Letter from the CEO

Since the turn of this century the practice of banking has experienced such tremendous existential change as to be incomparable to the enviable industry it once was during the roaring nineties. As management consultants – working over the past fifteen years specifically within banking – we have found ourselves on the frontlines of the battle between the purest form of uninhibited capitalism, and the opposing forces calling for state intervention.

Certainly, many of the wounds suffered by banks since the crisis of 2007 have been self-inflicted. There will, however, be certain deeply negative and lasting consequences to much of the codified law that has been scribbled out of the populist revolt that followed.

To a large degree it has been forgotten that banking is the engine room of the body economic. Without it functioning as a viable privately-run industry, it will serve to magnify growing inequality as well as to magnify the dissonance between leadership and the populace. The western world has recently taken a sharp turn to the right. It has become inward- looking, prejudiced, parochial, and angry. Should the trend continue, we may soon witness banking becoming adjunct to the state, and an instrument of its political objectives.

As consultants we have had the privilege to travel and work in many diverse cultures across the world. In the run-up to the crisis we were privy to thin-capital buffers, high leverage and exceptional ROEs. The themes today are very different: anti-money laundering, reining in tax evasion, stress testing, and risk process audits. In the breadth of our experience we have observed a steady grinding down of the ability for banks to innovate and accelerate the economy.

We intend for this Journal to document our thoughts, to point out    the internal contradictions, perhaps even to provide a small voice for caution against the maelstrom of political and economic chaos that is now commonplace.

In this first ever Monocle Quarterly Journal we cover over-capitalisation of balance sheets, blunt liquidity rules, myopia in the exercise of stress- testing and in the excessive fining of banks, as well as some of the political motives that have driven these phenomena. We hope the research, as well as the polemical tone, at the very least sparks debate. Our gratitude is extended to all those we have met thus far on the journey we have travelled. No doubt there is much more to witness and to learn, and perhaps even to change.

David Buckham
Chief Executive Officer

Monocle Quarterly Journal Articles

June 25
To many, the question must seem borderline subversive. In a post-Crisis world in which taxpayers were forced to bail out the banks, questions like these are generally deemed inflammatory and irrespons...
June 24
It will more than likely only be in the fullness of time that we will know whether the medicine administered to the broken global financial system following its 2008 implosion has worked. At that tim...
June 24
Since the 2007/2008 Financial Crisis internationally, banks have suffered an enormous loss of independence and power. They’re no longer extremely aggressive institutions, which traded derivatives off ...
June 24
The results of the annual banking stress tests were published on the 23rd of June 2016, and there were many victims. The US Federal Reserve tested 33 institutions and three were found wanting. Two fai...
June 24
In essence, tax can be simplified into two categories: those that occur before one’s death and those that occur after. Of the two, it is surely the estate duty that is levied after one’s death that is...
June 24
When Deutsche Bank announced its 3rd quarter earnings for 2016 at EUR 278 million, representing a return on tangible equity of a measly 2 percent, the market counter-intuitively rallied. Clearly, inve...
June 24
The liquidity and credit crisis of 2007 and 2008 left the global financial community concerned over liquidity risk. Suddenly, multi-national banking groups realised they had to broaden their understa...
June 24
At the very moment that David Cameron met with the 27 remaining leaders of the European Union on the fourth floor of the European Parliament in Brussels, Nigel Farage, a key proponent of the Brexit ca...
June 24
In 2015, French economist Thomas Piketty came to South Africa and spoke at the University of Johannesburg’s Soweto campus to over two thousand enamoured students, dignitaries, top-ranking ANC officia...
June 24
For the past sixty-one years, Fortune magazine has published a list of the largest 500 firms in the world. An idiosyncrasy of the list is that it is published in order of revenue, instead of profit or...
June 24
It is generally agreed amongst economists, bankers, politicians and the man on the street that the 2007/8 Financial Crisis was the worst economic crisis to befall western economies since the Great Dep...
June 24
In the third quarter of 2015, Chinese authorities confirmed that growth had dipped below 7 percent – an announcement that had equity markets reacting sharply and negatively.
June 24
The extent to which things have changed since the 1970s is dramatic. This country has had, for some time now, the most liberal forward-thinking constitution ever written – in any country, anywhere. Ou...
June 24
When voters in northern England chose on the 23rd June 2016 to leave the European Union, they could not possibly have understood the negative consequences for UK banking. Nor, to a large degree, did t...
June 23
A few years ago, we were asked to assist a bank with their methodology for credit risk models. It was a relatively usual request – with one glaring difference. The bank wasn’t exactly around the corne...
 
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