How bankers lost their credit

How bankers lost credit

Ex-banker Martin Vander Weyer charts the decline of moneymen from cultivated intellectuals to today’s greedy buccaneers

Prime ministers, archbishops, police chiefs, England football managers: none of them seems quite what they used to be.

But what about bankers? Were the City chaps (yes, they were all chaps) of yesteryear wiser and nicer than the thrusters of today? Or does that career path perpetually attract a character type the rest of the world tends to despise?

Before I answer, I’ll admit I escaped from a first career in banking 30 years ago – so you might think what I’m about to express is no more than the prejudice of age. But I believe there really is a generational difference.

Let me transport you to a party hosted by a banker called Michael von Clemm in Beijing’s Forbidden City in June 1989 – actually on the day of the first prodemocracy demonstration in nearby Tiananmen Square.

Von Clemm, an American of AngloGerman descent, was a big shot from the Wall Street firm of Merrill Lynch. He was in China with hundreds of other financial frequent flyers (including, in a junior capacity, me) for a meeting of the Asian Development Bank, the sort of networking thrash the veteran City columnist Christopher Fildes used to make fun of as ‘boondoggles’.

In essence, von Clemm’s crowd were a tribe of Gucci-shod globetrotters who prided themselves on their hinterland as much as their mastery of markets. They did huge deals for huge clients and still found time for opera, fine art, fishing in Iceland, skiing in Méribel (which they pronounced ‘Mirabelle’, like the grand London restaurant they also frequented) and shooting everywhere. Von Clemm’s own story extended to several degrees in anthropology and chairing the Roux brothers’ restaurant business.

This was the generation who built the ‘euromarket’: nothing to do with the future single currency – it was a mechanism for recycling offshore dollars into bond issues for international borrowers. Its progenitor was Siegmund Warburg (1902-82), an emigré intellectual and City mould-breaker who would habitually ask job candidates, ‘What books have you read lately?’ and ‘What do you collect?’

That Beijing throng might have included Siegmund’s protégé David Scholey (once a jazz trumpeter) or Win Bischoff of Schroders (‘dashing skier … twinkling blue eyes’, wrote a breathless profile-writer) or Michael DobbsHigginson (also Merrill Lynch, part-time Buddhist monk) or the ever-present Baron William de Gelsey of Orion Bank, who after his death this year at the age of 99 was accorded a Hungarian state funeral.

These cosmopolitans did business, just as they socialised with each other, in a civilised way. Meanwhile, back home, there was another archetype of the era: the subfusc City financier whose word was his bond though his words were few. John Baring (of Barings, naturally), Lord Rockley of Kleinwort Benson and Tim Collins, a naval war hero who chaired Morgan Grenfell, were all famed for the wisdom they expressed by saying little. They were liked and trusted by their peers.

They represented a golden phase of the City that lasted from the first Eurobond issue in 1963 to the forced sale of SG Warburg to Swiss Bank in 1995, shortly after the collapse of Barings. What happened towards the end of that period was a shift of power from the clienthandling polymaths and grandees to the trading-floor buccaneers.

Big Bang, the 1986 change of City ownership rules, was the harbinger of change. Liar’s Poker, Michael Lewis’s 1989 account of life at Salomon Bros in London and New York under foulmouthed trading bosses such as John Gutfreund and Lew Ranieri, was a glimpse of the world to come.

As post-Big Bang remuneration scales soared, the lust for life-changing bonuses – best bagged by hopping from firm to firm – destroyed corporate loyalty and collegiate trust. The one-off deal and the billion-dollar trade became more important than the long-term client relationship. Aggression became a more useful attribute than breadth of knowledge.

A search for star names of the past 25 years yields only Fred Goodwin, who brought the Royal Bank of Scotland to its knees, and Bob Diamond of Barclays Capital, who fell after the Libor scandal.

Smaller fry of the new breed included Tom Hayes, a maths genius who received an 11-year sentence for Libor fraud, and Jonathan Burrows, a fund manager, caught dodging £43,000 in commuter train fares.

The rest of their pack were remarkably well-portrayed in the BBC drama Industry – about stressed-out, coked-up youths making a mark in a fictional investment bank, Pierpont & Co.

Too harsh about the present generation? Too nostalgic about the previous one? I honestly don’t think so. Human nature may not change, but the way people behave to impress their peers certainly does.

Banking used to be a milieu in which intellect, integrity and shared culture mattered a great deal. Then it became an arena in which market power and the mathematics of money trumped all else.

The gentler souls lost out and left, some to join niche boutiques that replicated the old modes of business.

Many – including me – departed with great relief, to find entirely new careers.

The lust for lifechanging bonuses destroyed corporate loyalty and trust

Martin Vander Weyer’s The Good, the Bad and the Greedy: Why We’ve Lost Faith in Capitalism (Biteback) is out on 14th October