Trust is Good — Control is Better — Open Communication
The Best Way of All for Winning Back Trust!
Managers and Banks in Discredit — Lost Trust
Can Not be Re-established Automatically or by Laws
By Jürgen Parr
parr@golinharris.de

No day passes without a new case of a bank losing billions or of a board member from a large corporation coming under suspicion of tax evasion. All of this continues to erode the population's trust in managers and banks. The current list stretches from Klaus Zumwinkel, takes in Jérome Kerviel (Société Générale), IKB, Bayern LB, West LB, Sachsen LB — and could go on. The Who's Who of leading managers and most prominent players in the financial market has managed to ensure that the public at large has lost any trust whatsoever in our financial system and its leading figures. It is therefore no surprise that generalizations abound and it is becoming virtually impossible to make a discriminating consideration. What can companies, banks and managers do "to combat this" or to help people view this image in a different light?

Increase transparency

Finance Minister Peer Steinbrück spelled out the communicative line of approach at the New Year's reception of Deutsche Börse on 28 January. The most important commandment for the banks at the moment, he claimed, was to sort things out quickly and "to do so without any long delay." Those who only reveal their information little by little were not only provoking punishment by the market, but damage for the entire financial sector, he went on, adding: in view of the current crisis of trust in the banking sector and in the financial markets, there was a need to increase transparency. Steinbrück demanded improvements in banks' internal risk management. Germany will also be campaigning for more transparency on the international level.

Growing lack of trust — investment products unknown

At the beginning of the year, the institute for brand controlling BrandControl conducted a survey which concluded that every third wealthy individual had lost trust in the banks due to the subprime crisis. And this damages the image of private domestic and foreign banks as well as the state banks: 44 per cent of the respondents in the private banking target group and 38 per cent in wealth management have no more trust in the banks. This applies above all to the Sachsen LB, which is mistrusted by some 20 per cent of the private banking target group and just under one-third of the wealth management group. Two more banks among the total of 40 analysed also score badly: roughly 20 per cent of the two target groups have lost trust in both the Deutsche Bank and West LB. Added to the mistrust is another problem: many wealthy individuals are not at all familiar with the investments offered by the banks. This affects roughly 20 per cent of the private banking target groups and more than half of those in wealth management

More open and more credible communication now!

Neither the principles of the Bundesanstalt für Finanz-dienstleistungsaufsicht (BAFin), the German regulatory authority for financial service providers, nor the German Corporate Government Code is able to prevent such rejection and loss from occurring. Often it is the profane greed for power and millions that drives individuals to act in this manner. And seldom do the type and contents of the communication lead to any generation of understanding or sympathy when the public prosecutor's office instigates legal proceedings into the billion-dollar deficit. Banks and managers are best able to convey trust during their routine dealings: day in, day out, they prove that they do in fact deserve the trust from customers, investors and employees.

The current crisis on the financial market shows that the banks now, more than ever, need to expand their communication in order to regain investors' trust and address potential customers. This also includes being better-informed about complex products and indicating possible risks. Managers have a special social responsibility for the acceptance of the market economy: only those who adhere to the rules of the game and laws can expect that business and managers will also be accepted and their demonstrable performance appreciated. Corporate social responsibility and philanthropy programmes are of little use here either if the communication is not fundamentally correct. Trust is only earned by those who communicate openly, honestly, credibly and consistently even if the subjects and occasions may not always be positive.