1. Bankers‘ oath
2. Business culture
a) professional oath
b) ethics training
c) incentives to reward honest conduct
d) reminders of honesty norms as „red flags“
e) top management as role models
3. Regulatory framework
4. What needs to be done?
5. Conclusion

1. Bankers’s oath: We take the initiative to implement by law the bankers‘ oath for all employees of financial institutions. The banking industry has to demonstrate internally as well as to the public, that they are bound to a code of good conduct, ethical standards and careful practice.

Breaching of the oath must have disciplinary and criminal consequences. The Code of good conduct must be applicable to all persons performing work for the bank.

The oath formula could be:
I swear within the limits of my role that I perform at any moment in this financial institution:
• That I will perform my duties with integrity and care
• That I will carefully consider all the interests involved in my company, i.e. those of the clients, the shareholders, the employees and the society in which the company operates
• That in this consideration, I will give paramount importance to the client’s interests
• That I will comply with the laws, regulations and codes of conduct applicable to me
• That I will observe confidentiality in respect of matters entrusted to me
• That I will not abuse my knowledge
• That I will act in an open and assessable manner
• that I know and respect my responsability towards the society
• that I will endeavor to maintain and promote confidence in the financial sector

This I declare and promise (so help me god)

This oath is taken in the above form on (date) at (place) before (name of administer and management) in the presence of (disciplinary authority)

2. Business Culture: 

Companies should encourage fairness and honest behaviour – thus creating credibility – by changing the norms and the rewards associated with the employees professional identity:

a) The employees should take a professional oath as described above, analogous to the Hippocratic oath, lawyers or auditors professional obligation to confidentiality.

b) This should be supported by ethics training to reflect the impact of their behaviour on society rather than focussing on their own short-term benefits.

c) A norm change also requires that companies remove financial incentives that reward employees for dishonest behaviours, i.e. reckless risk taking.

d) Ethic reminders as „red flags“ may promote compliance with the honesty norm. The use of ethics reminders requires a detailed analysis of work routines to find out where and when employees make critical decisions regarding norm obedience, so that normative demands can be rendered salient at the right time and place.

e) Top management and leading decision makers have to be role models. Payments have to be transparent in goals and performance. To set up rules of transparency is the duty of the owners and their control boards.

3. Regulatory framework: 

The global financial crises of 2008 has caused enormous fiscal costs to save the banks and has shown an unhealthy dependence of banks with national budgets and debts.

Ultimately, the taxpayer has to settle the bill.
Such a systemic crises needs to be avoided in the future.
The main reasons for the crash of 2008 were government-backed agencies and bond dealers that were looking for ways to maximize profits and minimize risk for themselves while heaping the risk on vulnerable small borrowers.
The Euro-zone crisis was mainly triggered by extreme rigidity and non-liberalism of some European societies, economies and political systems and financial institutions, that were betting against it. It has lead to the tragedy of extreme austerity and massive youth unemployment.
As long as our Euro-political system refuses to tackle gerontocratic career structures, bureaucracies and restictive practices, all the liquidity that is printed and flushed into the financial markets by the ECB, by government debt and bank’s liquidity creation will not create new asset values, new start-up‘s and sustainable growth.

Abgestimmt mit Prof. Stefan Homburg und Prof. Kai Konrad
gez Stephan Werhahn , München im April 2013