The Donkey and BNP Paribas

Watching CNBC I could hardly believe my eyes when I spotted a middle-aged French lady rattling on about her life, that she dreamed of being rich when she was young. This was quickly followed by a rustic-looking chap from the West Bank who told us how happy he was to feed his donkey. The suspense built and I thirsted for the commercial break on CNBC to end so that I could find out which company was willing to shell out money for such incoherent testimonials. I expected it to be some charity, maybe linked to the United Nations. But the surprise winner was -- BNP Paribas! Having just closed today's Financial Times where a back page was adorned by the picture of Roger Federer it made it all-too-obvious that advertising has taken on a life of its own in the banking industry. Is it really all about image? Is it impossible to differentiate yourself by promoting a better product and outline the benefits it may bring to the customer? Does it really matter to a customer of Credit Suisse how many matches Roger Federer may have won? (650 in case you wonder). At a time when banking worldwide is an industry under siege - and we may not yet have seen the worst of the political onslaught - one would hope that managements put their advertising departments on a tighter leash.

Fraud Prevention - Banks walk on thin Ice

News that a subsidiary of Nord LB (Norddeutsche Landesbank) in Switzerland may have fallen victim to a fraud in its trade finance activities that may cost it up to Euro 130 million is a timely reminder that banking is a hazardous business where a premium should be put on credit and operational supervision and due diligence. All-too-often senior management is preoccupied with 'strategy' or political infighting and pays little or no attention to what is going on further down in the organisation or in outposts of a far-flung (overextended?) empire.

BNP Paribas Compensation: A Model to follow?

BNP states that is will reduce its compensation-to-income ratio to 27 per cent for FY 2009. In doing so management claims to address public (political) concerns over excessive pay. BNP certainly seems to navigate successfully through the twin challenges of keeping regulators sweet and running the business smoothly while competitors stumble over PR gaffes or management mistakes. However, we do have a sneaking suspicion that pressure on compensation levels in the large investment banks will contribute to a revival of smaller competitors that are not in the limelight and are less subject to regulatory fervor.