Banks need to put their customers’ interests before shareholders, develop a new policy towards pay and improve the role of their supervisory boards, according to a new report drawn up on behalf of the banking sector.
The report was produced on behalf of the Dutch banking association NVB to look at ways of restoring public confidence in banks following the credit crisis.
Banks must again make sure the interests of customers outweigh those of shareholders, employees and society at large, the report states.
This requires a ‘fundamental change in mentality’, the report states. By serving their clients properly, banks can win back lost trust, the report says.
‘That trust has been severely damaged by the economic crisis, in the Netherlands as well,’ the report states.
It recommends that senior executives should no longer earn more in variable bonuses than fixed salary and that options should no longer be included in performance-related packages.
Supervisory boards should be made more professional, the report says.
And it recommends that bank executives sign a formal ethics declaration which reads: ‘I declare that I will perform my duties as a banker with integrity and care. I will carefully consider all the interests involved in the bank, i.e. those of the clients, the shareholders, the employees and the society in which the bank operates.
‘In this consideration, I will give paramount importance to the client’s interests and inform the client to the best of my ability. I will comply with the laws, regulations and codes of conduct applicable to me as a banker. I will observe secrecy in respect of matters entrusted to me.
‘I will not abuse my banking knowledge. I will act in an open and assessable manner and I know my responsibility towards society. I will endeavour to maintain and promote confidence in the banking sector. In this way, I will uphold the reputation of the banking profession.’
In a reaction, the NVB said the recommendations formed a good basis for action. Banks regretted the loss of trust that the crisis had brought with it and would ‘take their responsibility’ for solutions to improve the working of the sector as a whole’.
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