Banks must re-embrace public stakeholders
From Deutsche Bank to Santander or ING, banks in Europe need to change with the times and accept accountability to a wider public, represented by their governments: as with weak capital, deficient ethics will only entail greater state control.
The idea that German government support for a Deutsche Bank-Commerzbank merger is back-door nationalization – bringing Deutsche to heel, not just facilitating a bailout – reflects an ever-clearer reality in European banking. Unrelenting reassertion of public control over European banks is the biggest cause, not just the result, of their widening profitability gap and their increasing lag in terms of international assertiveness versus the Americans.
The same dynamic is at play in Banco Santander’s recent attempt to hire Andrea Orcel. In a different political environment, Santander might have got away with its hastiness in naming Orcel chief executive, despite the need to take on €50 million in deferred pay from UBS.
Not so now: Orcel goes against the spirit of the times, however much Santander might need a charismatic outsider to boost its capital and grasp important strategic decisions. UniCredit’s chief executive Jean Pierre Mustier did just that at UniCredit – but while Orcel’s hiring collapsed over his rewards from UBS, Mustier has embraced austerity and voluntarily cut his own pay.