“Do you want to be a clerk or do you want to provide counsel?”
I remember being asked that question years ago by a very wizened old PR head at the investment bank where I had just started working.
He followed the question up with the following words of wisdom: “There are people who make their careers on their ability to take good notes and type up the press release. But if you want to be respected in this space, you have to understand everything that’s going on around you. You have to be able to ask intelligent questions and push back when you feel you’re not getting the right answers.”
That exchange springs to mind as I look around today at the trend toward bringing in people with non-banking backgrounds into the most senior comms roles at global banks.
There’s some benefits to that – bringing new blood into an organization, free of all the embedded notions of how things should be; someone with a mastery of social media or a background in politics or government.
And yet I can’t help thinking that at a time like this, there is a need for crusty old PR people steeped in knowledge of investment banking and trading.
The simple reason is the more you fully understand the intricacies of the industry you’re in, the better job you can do of protecting your firm from those inside who want to downplay, minimize and sanitize every nasty thing that pops up in front of them.
Let me give you an example.
Years ago, there was a corporate meltdown in the US that left banks around the world holding huge amounts of exposure on both their lending books and their trading accounts.
The news hit the wires pre-market opening in London and there was a mad dash among all the various desks to understand how much we were on the hook for.
As we tried to get to the bottom of things, I took a phone call from a senior PR person in the holding company who said they had just got off the phone with the chief credit officer who said our exposure was ‘de minimis’ – a fancy Latin term bankers like to use instead of small or insignificant.
The PR person then instructed me to get the word out to the financial journalists who were trolling the swamplands trying to figure out who had gotten burnt the worst.
And that’s when the whole distinction between being a clerk and counsel kicked in.
“I’m afraid I’m not inclined to do that,” I told the shocked PR person.
“Are you crazy? We’ve got a chance to steer all this attention away from ourselves and you’re not going to take it.”
It was then that I explained that the figures the chief credit officer was looking at represented just one small slice of our exposure. I realized it would take at least until the end of the day before our own credit officers searched across the commodities, the currency and interest rate derivative desks to find out what we really owned.
I told the group flack that I would get back to them as soon as I was confident we had turned over every stone in the shop. “I will bet you right now when we get the final number it would be three to four times larger than the one you got this morning.”
As it turned out, it wasn’t until the next morning after New York, Hong Kong and Tokyo had been scrutinized that we realized what our exposure really was. And lo and behold, instead of three to four times the initial report, it was closer to five times bigger.
To have rushed out the door with our initial finding, only to have to come back later and readjust, would have made us look duplicitous and incompetent – and I’m not sure which of those is worse.
All this leads me to another bit of wisdom handed down to me over the years.
There are certain departments it pays for a senior comms practitioner to stay close to in an investment bank. I’ve mentioned in previous columns the need to be in the good books of the investor relations department. The other individuals that merit a mention are those in the operations department. When a client’s money is lost; when a power outage takes you out of the market; when anything goes wrong with the plumbing, it pays to know these guys.
‘Tis better to be humble in victory than defeat.
It seems like investment bank comms teams took that advice in the recent round of earnings announcements.
With increased corporate activity and volatility in the bond and currency markets, it was not surprising that the revenue numbers for the majority of banks big and small were robust.
What was missing was any chest-beating rhetoric along the lines of: ‘We’re back.’
Probably a wise move, for two reasons. First, there is still a large amount of uncertainty over the direction of the global economy, and secondly even some of the banks who reported big numbers from their investment banking and trading divisions are still under the gun to shrink those operations for the sake of the asset management side.
It will be interesting to see though, if the next quarter’s results remain bullish, whether the banks become a little more vocal about their accomplishments.