Press
Release
Trendwatcher Adjiedj Bakas warns
banks about new competition and the
need for renewal
“Cocaine
use influenced risk culture in banking
world”
“Banking secrecy is not only finally
ending in tax havens such as Luxembourg
and Switzerland; this will also become
a worldwide trend. There will be a revival
in the importance of cash as a result.
Deposit boxes full of cash and “war
gold” (jewels, etc.) are becoming trendy
among wealthy private clients. The anonymous
numbered account is coming back. Be
sure you are ready as a bank.” This
was what trend watcher Adjiedj Bakas
had to say last Friday May 29th before
an audience of 600 bankers in Luxembourg.
They were there for the prestigious
annual Luxembourg Financial Forum, in
response to an invitation to top Luxembourg
bankers extended by the Luxembourg government
and the Luxembourg Banking Association.
The Forum took place last Friday 29
May 2009 for the fourth time.
After Nobel Prize winner Edmund Phelps
had informed the audience that the present
economic crisis could well lead to the
end of globalisation, Bakas was given
the chance to share some insights and
ideas from his latest book Beyond the
Crisis with those present. “Most bankers
are professionals who simply did their
work, in accordance with international
ethic standards,” said Bakas. “But the
general public feels that bankers have
cheated them. Although the public -
which is also driven by the human trait
of greed - is partly responsible for
the crisis, the industry must take the
feelings of consumers seriously. Emotions
are also facts. And the E of Economy
is also the E of Emotion. The industry
now has to really work to restore trust.”
Bakas criticised the use of cocaine,
speed and other drugs by some of the
bankers in Wall Street and other financial
centres who designed the complicated
financial products which led to disaster.
“It has been known for a while within
the industry that a small but influential
group of staff and decision-makers are
using coke and speed. Several insiders
told me so. It is also known that the
use of coke encourages risk-taking behaviour.
You feel like a big man when you’ve
had a toot. This stops you from making
the correct risk analyses. It is therefore
time to put a stop to using coke and
speed”.
Bakas also consideres that “rating agencies”
like Standard&Poors and Moody’s
had unjustifiably been left in peace.
“A subsidiary of Lehman Brothers merchant
bank sold more than 600 billion euros’
worth of rubbish products to unsuspecting
banks and private persons in the tax
haven of The Netherlands. The notes
to a product like this covered 600 pages.
Who would read them? These products
after all had been given an AAA rating
by the rating agencies. The Lehman Brothers
operation in the Netherlands was run
by a young man of 31 who made vast sums
of money from it, but who is still at
liberty. This example goes to show that
some of the biggest bank robbers in
the modern era were bankers. Not all
bankers, but rather a small group who
were actually involved in playing an
‘end game’. They knew this pyramid scheme
was going to come to an end one day,
but they carried on feverishly in a
haze of drugs and a more-more-more culture.”
According to Bakas, the banking sector
needs to isolate the guilty and punish
them or have them punished, if it is
going to clean up its act. National
and international criminal laws must
also be reviewed in such a way as to
make prosecution and punishment of the
guilty possible, and to recover their
profits and hand them over to their
victims. Bakas also called on the industry
to hire more women. “I can see that
there are 90% men and 10% women in this
hall. Would this crisis have happened
if the ratio had been reversed?” he
asked the audience. “We know from the
insurance and investment industries
that women take fewer risks than men,
and are therefore more stable clients.
I would recommend using that knowledge
and appointing more top women. Read
the salutary work that female marketers
at Bosley are doing now for e.g. Sony
and Daihatsu.” Bakas also told the bankers
that Islamic banking has recently been
more successful than Western banking.
“Islamic banks suffered less damage
than Western ones. This is another aspect
of Islam which we now hear about all
the time, certainly during this period
of European elections. Chinese and Indian
banks suffered less as well.”
Bakas also believes that there is a
market for new banks, and there will
certainly be some. “You are going to
have new competition. The car company
Leaseplan has already made it known
that it is going to open an internet
savings bank. Siemens is expanding its
banking activities towards customers
and suppliers. The airlines Easyjet
and Virgin are already running successful
banks. Google has been granted a banking
licence, and Apple already has its first
bank in New York. There is already an
application available for banking using
the iPhone, and we may expect an Apple
Bank in the near future. The brand loyalty
of Apple users is such that more than
80% of them would consider moving over
to a newly formed Apple Bank. You can
sneer at these potential new competitors
or not take them seriously. But think
about the first Japanese cars that appeared
in the 1960s on the European market.
We laughed at them as well, but they
fundamentally changed the car manufacturing
industry. The new players are going
to do the same to the banking landscape.
Be ready for the inevitable.”
Bakas’s contribution to the Forum was
positively received. Philip Wood, lawyer
at Allen & Overy and Visiting Professor
at Oxford, Cambridge, LSE and Queen
Mary College in London, who specialises
in banking, said during the Forum: “I’ve
already read Bakas’ book Beyond the
Crisis from cover to cover and I really
enjoyed it. It is chock full of good
ideas.” Paul van Olst, Sales Director
of FIL Investments International says:
“Wow… These are exciting times. Nowhere
to hide, it would seem. What a great
book; almost read it in one go! I’m
not of an anxious nature, but an air
raid shelter in the garden is not a
luxury. Fortunately there will be another
Boom after the Doom!”
A few days before the Forum, Bakas spoke
about this book to Austrian business
leaders, at the invitation of Chancellor
Werner Faymann. He told the Austrians
that a while back they went through
a serious wine crisis, and emerged stronger
than before. “Austrian wines are again
world beaters. Learn from that crisis
to deal with the current one.”
Bakas will soon be addressing more bankers
in Europe and will then leave for China
on a lecture tour. In June the sequel
to this book, called “World Megatrends”
will be released in the UK and 40 other
countries as well. |
