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The Thundering Herd

07 April 2009  |  7490 views  |  1

News reaches me that banks and other financial institutions are now hiring seasoned bankers, on the grounds that these experienced resources will have the necessary gravitas and industry knowledge to run the banks of tomorrow in the way that they should probably have always been run.

And this surely is a good thing. Good to see the greybeards being drawn out of retirement and pressed into action?

Well yes and no. I understand the sentiment, but these financial institutions really should be implementing a resourcing plan around a well thought out strategy and set of business plans. Not just hiring a particular profile of candidate just because that's what everyone else is doing.

We've seen the herd mentatility take us thundering into equities in the 1980s, and then out and into derivatives in the 1990s. Then the dot.com boom and bust, followed by the open-necked world of the hedge funds and then charging into prop trading of CDSs. It's my guess that the banks that succeed tomorrow will be those that ignore the fads and trends of today and plan for well managed businesses rather than just being dedicated followers of fashion.

Hugh Cumberland

Product Strategy Director

BT Global Banking & Financial Markets

TagsRisk & regulationPost-trade & ops

Comments: (2)

Roger Elwell
Roger Elwell - Yes Please - Colchester | 07 April, 2009, 15:05

Hopefully, the 'yes' part of your 'yes and no' reflects the very real need to inject some proper experience and - dare I say it - caution, back into banking...?

We really do need some people who are prepared to say 'no' to fancy financing schemes, and who understand how proper banking works.  Too many of them were shunted out by the 'can do' brigade over the last decade.

If this is a 'herd mentality' then bring on the sheepdogs...

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A Finextra member
A Finextra member | 19 April, 2009, 13:00

I'm good with the "Yes" bit as long as it's recognition of need rather than just another fad - the latter seldom last or are given sufficient respect.

Too often the first victims of a downturn are the most experienced (and therefore most expensive). To borrow from an old school chum, this leads to the loss of "institutional memory" which, if retained, might better prepare for the good - and bad - times ahead.

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