Tuesday, October 9, 2012

Even the rich don't trust banks

A Telegraph article discusses a survey of wealthy UK investors that says these investors don't trust the banks.

YouGov figures show that over two thirds of well-heeled bank customers have less faith in the banking industry than they did a year ago. 
The survey looked at those with more than £250,000 in investable assets and found that the biggest reason for their lack of faith was the bonus culture, along with banks putting short-term profitability ahead of customer welfare. The Libor-fixing rate fixing was also a significant contributor. 
More than eight in 10 believed banking practices to be equally or more dishonest than those in journalism, despite the Leveson inquiry finding that many rich people had been the victims of hacking by newspapers. 
Nearly one in 10 of people surveyed had had their bank accounts hacked into, over a sixth of whom said their bank had not recognised the change in spending. 
You know it is bad when people see their victimization at the hands of the banks as worse than having their personal privacy stolen.

Regular readers know that the first step in restoring trust and changing the culture of banking is to recognize that sunlight is the best disinfectant.

Any bank that wants to demonstrate that it can be trusted will voluntarily provide ultra transparency and disclose its current global asset, liability and off-balance sheet exposure details.

Only this level of disclosure by banks allows sunlight to act as the best disinfectant.  For example, it would have been prevented manipulation of Libor.

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