This week at Bradley O’Mahoney
OUR FOCUS: Banking on reputation
With the image of UK banks at an all time low, we were interested to learn that Switzerland’s biggest bank, UBS AG, will base part of the bonus paid to its CEO on the progress he makes in restoring its reputation.
The aim is to evaluate Sergio Ermotti according to what is necessary for executing the company’s strategy in the long term.
UBS Chairman Kasper Villiger, whose tasks include developing recommendations for the CEO’s salary with the compensation committee, said the bank won’t assess Ermotti’s performance by profit alone, but will also include targets for boosting capital ratios and cutting risk-weighted assets. Client and staff satisfaction will also play a role.
On the basis that CEOs and senior executives within UK banks appear to be judged purely on profits, this seems to be a smart move. Moreover, our bank chiefs are getting massive bonuses even when delivering disappointing results.
It really is about time that the UK banking sector put its house in order, recognising the serious reputational damage that these huge bonuses are causing, and take a more responsible attitude during these very difficult times for many of their customers. Putting reputation at the heart of a much wider performance criteria makes sense and would send a message to the UK public that banks want to restore their battered images.
Meanwhile, UBS’s new rules will not rely only on quantitative criteria that are easily measured.
Villiger said the CEO’s impact on the bank’s reputation, for instance, would be in part assessed by considerations such as media coverage. “But there will be an element of judgment, which the board will have to make together with him,” he said. “It can’t be done just by a computer program.”
Ermotti’s predecessor, Oswald Gruebel, left last year after the bank uncovered a $2.3 billion loss from unauthorised trading at the investment bank in September. Gruebel, 68, and Villiger, 71, tried to rebuild the bank’s image after a near bankruptcy in 2008 and the unprecedented delivery of data about wealthy clients to the U.S. to avoid a criminal indictment.
Headlines of the week
A ‘dull’, ‘boring’ story… “Welcome to Dull, twinned with Boring” (The Scotsman, 25 April 2012)
FINALLY: A super thought
Our office has been abuzz this week with the release of the Marvel Cinematic Universe franchise of films, ‘Avengers Assemble’.
For those who don’t know (who are you?!) the film sees a group of superheroes who’ve each recently been the star of their own Marvel movies, including Iron Man, Thor, Captain America and the Hulk, assembled by the super cool Samuel L Jackson aka Nick Fury to take on evil enemies threatening to destroy the earth.
The film release has got us thinking about superpowers we’d like to possess here at BOM Towers.
Forget invisibility and flight, our hero would need to be a ‘captain’ of charisma, possess Jedi-style powers of persuasion, be able to occasionally stop time and, of course, what PR hero/heroine would be complete without super-human spelling and grammar powers!
On second thoughts, perhaps we’d settle for Thor’s sledgehammer…