© The Financial Times Ltd 2016 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
April 24, 2014 12:19 am
In the US, the public’s dislike of bankers for their role in sinking the country into financial crisis in 2008 found its voice in activist movements such as Occupy Wall Street.
Now the anger has moved off the streets and even the big banks’ upcoming annual shareholder meetings are expected to be calm.
One senior US banker was cautiously optimistic, saying: “Maybe I’ve got my head in the sand, but it’s got a lot better.”
The statistics appear to support his view.
While banks have yet to fully rebuild their reputations, public trust in US banks has improved to 46 per cent this year, up from 36 per cent in 2009, according to the annual trust barometer survey by Edelman, the public relations company. The improvement was not enough to move banking out of the group of least trusted sectors in the world.
But at Harvard Business School, students remain interested in working in the sector, even if some will use it as a route into hedge funds and private equity.
Kristen Fitzpatrick, the school’s head of MBA career development, says: “Nowadays, you just can’t waltz into a job in a hedge fund or private equity firm. The likelihood that you’re able to switch into private equity without M&A or any other investment banking experience is not high.”
The graduates who move into banking will enter a more regulated and sombre sector than the classes that graduated before the financial crisis.
US regulators have extracted more than $100bn from banks in settlements since the financial crisis, hitting earnings. The penalties have affected banks’ financial performance, dragging on earnings, but no senior Wall Street executive has been jailed.
Banks are attuned to the anger, says Ken Bentsen, chief executive of the Securities Industry and Financial Markets Association, which represents hundreds of securities firms, banks and asset managers.
“We don’t discount the public reaction to the financial crisis,” he says. “Our members feel strongly about trying to restore trust and confidence.”
US financial services companies have focused on improving compliance, adhering to regulations and trying to present the societal benefit of the financial services sector, says Mr Bentsen.
Nevertheless, there are some indicators that public resentment against US banks is simmering just beneath the surface. While the more public protests have waned, critics have been quick to the mark when given the opportunity to vent their anger online.
When JPMorgan proposed a public Twitter conversation called #AskJPM with one of its top bankers Jimmy Lee in November, it was forced to cancel the event after it attracted a deluge of negative comments before it had even started.
At least two-thirds of the more than 8,000 tweets that were sent using the hashtag contained negative comments.
There are also broader political implications in New York that show how attitudes towards the wealthy elite have changed. Cutting a starkly contrasting figure to outgoing New York City mayor Michael Bloomberg, Bill de Blasio last year was elected mayor after a campaign focused on addressing widening inequality between rich and poor.
Fighting back against the anger provoked by that widening gap has proved deeply unpopular. In January, Tom Perkins, founder of Kleiner Perkins Caufield & Byers, one of Silicon Valley’s best-known venture capital firms, provoked a deluge of angry responses when in a letter to the Wall Street Journal he compared the “progressive war on the American one per cent” to the treatment of the Jewish community in Nazi Germany.
As attitudes towards banks have soured over the past few years, some of the world’s top business school graduates have been looking elsewhere for work.
Compared with her counterpart at Harvard, Maeve Richard, director of the career management centre at Stanford Graduate School of Business, has seen a stark response to the changes.
“A very small percentage of the class right now is going into investment banking,” she says. “Before the financial crisis, there was a lot more interest in investment banking. Post-crisis, it dipped.”
Bank chief executives have taken note and are working to improve their image with young recruits and the public, trying to stay out of the spotlight by avoiding the missteps that got their fellow financiers into trouble.
They have sought to polish their tarnished brand by associating themselves with more positive ventures.
For example, Citigroup sponsored New York’s hire-a-bike scheme, following in the footsteps of Barclays in London. While the effort has linked the bank to healthy living and environmental improvements, the company behind the technology recently filed for bankruptcy.
Philanthropy has been another lever to help the image of the big banks and the bankers within them, even as some have cut their donations.
Goldman Sachs in 2012 donated $241m to charity, 28 per cent less than the year before, according to the Chronicle of Philanthropy. Nevertheless, Goldman was the fourth-biggest US corporate donor in 2012 behind Wells Fargo, the bank, Walmart, the retailer, and Chevron, the oil and gas company.
Measured as a share of pre-tax profit, its donations were the highest amount among these companies.
Last month, Lloyd Blankfein, Goldman’s chief executive, launched a partnership with the World Bank to raise $600m for women entrepreneurs in developing countries, deepening the bank’s commitment to the cause.
Donations and philanthropic campaigns aside, bankers insist that what they do remains important.
As another investment banker put it: “Banking in its crudest function is a necessary evil.”
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.