Financial Times reports on Greek crisis

The Financial Times has today reported on how Greece is being held to account following the recent acquittal of journalist Costas Vaxevanis who revealed some 2000 of Greece’s rich and powerful who hold Swiss bank accounts.

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Prof Emilios Avgouleas chairs workshop on sustainable banking

Professor Emilios Avgouleas was invited to chair a well-attended workshop on sustainable banking at the UCL Centre of Law and Ethics, Faculty of Law on 6 February 2013. Emilios provided comment on a stimulating presentation on sustainable banking by Prof. Roger McCormick of the LSE and stressed the multi-dimensional and multifaceted essence of sustainable banking.

He noted that, while a sustainable bank is one that presents robust corporate governance, controls unethical behavior, and acts to protect depositors’ interests and promotes financial stability, the term has a much wider meaning. In this respect, he welcomed Prof. McCormick’s broader perspective that also included issues of environmental sustainability and inter-generational equity.  Professor Avgouleas observed that the fundamental question on which we ought to judge bank sustainability is the ways finance is used and what it achieves. To this effect, he suggested that the mess of contemporary banking is as much an issue of perverse incentives as of lack of values.

The issue of values was raised by an NHS trust chair in the audience, who observed that the similarities with systematic failures in patient care, an over-regulated area like banking, in certain NHS trusts and Libor and other banking scandals are striking.

Emilios observed that as we do not really know the true nature of the casual relationship between culture and incentives, the safest approach is to re-align incentives in the banking sector. He suggested that only meaningful structural reform of the banking sector that allowed utility (in contrast to speculative) finance (including community finance and microfinance) to flourish would provide a safe road to banking sustainability. In this context, in his chair concluding remarks, Emilios agreed with Professor Richard Moorhead, the Centre’s director, on the beneficial practical implications of taking values seriously and suggested that the right policy mix is to follow up any reinstatement of ethical values with changes in the operation of financial institutions that would lead to a costly but necessary rebalancing of incentives/rewards for conduct that furthers bank sustainability objectives.