Bankers Shaken But Not Stirred

To the untrained eye, the annual conference of the British Banking Association looked less like a gathering of the Masters of the Universe than it did a garden party in the stockbroker belt, the overdressed guests sodden with sweat on the hottest day of the year.

The industry strived to put its best face forward. Held in Merchant Taylors' Hall, a grand old dark wood-paneled building on Thread needle Street, the only bankers taking to the stage were those that had escaped the worst of the crisis; HSBC, Santander and Standard Chartered. In fact, there were few if any delegates from the banks bailed out by the taxpayer, put off perhaps by the £399 cost of attending.

The theme of the meeting was "Restoring Confidence, Moving Forward", reflecting the industry's desire to put the worst financial crisis since the Great Depression behind it.

The industry clearly still feels under siege. Angela Knight chief executive of the BBA said the organization had given some 700 radio and television interviews over the past year, two-thirds of which were "downright hostile". She said that "as an industry we will be judged not by how we see ourselves but as others see us," which left the uncomfortable feeling that the industry feels it is largely suffering an image problem. She was not alone in appealing for the witch hunts to stop. "Now is the time to stop the blame game. In the popular parlance, we have got it."

But have they? There appeared to be some dissonance between the industry and the tough talk from regulators and politicians. Better regulation was, of course, necessary, how could anyone argue otherwise? But that was tempered with warnings that it should not be too onerous. That demands for banks to hold additional capital not go too far; that calls for big banks to be broken up should be avoided, that bonuses, while they should be more transparent and better reflect the long term success of a bank, were generally a good thing. That risk-taking needed to be curtailed but that splitting investment banking from retail banking would not work, and in the words of Standard Chartered boss Peter Sands, offer only "an illusion of comfort". How much change the industry is really willing to countenance is questionable.

During a break, one banker snorted that Paul Myners, the City minister, who fired another salvo against executive remuneration, was simply being political and playing to the press gallery.

Stephen Green, the HSBC chairman, who is styling himself as the banking industry's Jimminy Cricket, managed to reach for the most striking hyperbole when he said the industry was "at the epicenter of a storm of rage" provoked in large part by the "greedy and short- termist" bonus culture. Like a slightly disappointed parent, he told the audience that restoring trust would take persistance and hard-work. "And when you read some the things that have been seen of late – the eye watering golden hellos in particular – frankly your heart sinks."But perhaps the most telling comment came from Bill Michael, a partner at KPMG, who perhaps inadvertently punctured the idea that the banking industry was in the midst of real change. All the talk of ridding banking of the complex instruments blamed for the crisis was apparently nonsense. "Financial innovation continues to grow," he said, and "transactions and risk are getting more complex".