Good Banks: Transcript of Archbishop Justin Welby's speech on 12th June 2013

by St Pauls Institute

Posted: 24 Jun 2013

[This keynote speech was delivered by Archbishop Justin Welby at our 'Good Banks' debate under the dome on 12th June 2013. This event was the third in a series of debates, held in conjunction with CCLA, entitled 'The City and the Common Good: What kind of City do we want?', and included on the panel Antony Jenkins, John Fingleton, and Laura Willoughby. The event was Chaired by Stephanie Flanders.

A full recording of this event, including responses from panel members and audience questions, is available to view here.]

Good Banks - St Paul's Cathedral
12th June 2013

[Note from Archbishop Justin: I am very grateful to Professor Nigel Biggar, Dr Catherine Cowley and Dr Anna Rowlands for the opportunity to consider these issues together in preparation for this event.]

Well good evening. I am very grateful to the organisers and arrangers of this series for the privilege of being invited, especially in such illustrious company as that of Archbishop Vincent Nichols and Professor Robert Skidelsky, the other speakers. As Stephanie said, I do apologise that I am operating under a constraint that I particularly didn't wish.

So I am really not permitted to say anything at all about anything very much at all. Like all good clergymen I am going to take 25 minutes to do that. You may well think that this is unlikely to result in any apparent change to the quality of the content of what I say, but the reason is that the banking standards commission is still in purdah. If you hear anything this evening that seems to you to be a hint, you are wrong. I have a malicious sense of... I have a sense of humour. But I am not that stupid, and there are no hidden clues. I don't do crosswords; I have never been any good at them and they are not in here, cryptic or otherwise.

So what I am trying to do this evening is to explore some issues around the development of banking culture. Because in the end, if we are talking about good banks, we are not talking about anything more complex than issues of virtue, value and purpose. So I want to talk about that, about its context in the City of London, and the question of how, if at all, the idea of a good banking culture can be developed. By that I don't mean 'good' in purely efficient terms, but good in its very being - 'essentially' good.

About 10 days ago I was speaking at a service in another large building in London, and I used the phrase about liberty under authority as being one of the ways in which we are structured to live in this country. I tried to suggest that we sit in a hierarchy of authority in this country that is presented in our constitution as beginning with God and cascading downwards through contemporary and historic institutions, with delegated powers, and which gives an environment of liberty, experiment and development in our nation, which is limited by authority and has boundaries.

But the trouble with that is that we always have to ask ourselves about the liberty to do what? About 30 years ago a famous Board of Trade enquiry into a takeover remarked that in that particular transaction everyone asked whether something was legal, and nobody ever asked whether it was right.

So we may have liberty to do all kinds of things, but are they good? Jesus in one of his best known stories, the story of the Good Samaritan, which I won't repeat to you, because I am sure you all know it... well I am not actually but I am still not going to repeat it to you. The story of the Good Samaritan gives, among other things, a parable of liberty used in association with financial power, to enable health and healing of someone who is wounded and struggling. In that parable liberty is at the service of love and gratuity, a free gift - a picture of Jesus himself, of course, in his relationship to us.

The victim in the story of highway robbery is initially helpless. The formal institutions of the law and a theocratic state betray the trust placed in them as the priest and the Levite pass by on the other side. Life continues on the busy road down to Jericho as the wounded man slips ever-nearer death. Rescue comes from someone without obligation, in fact an enemy - but with money, as Mrs Thatcher famously remarked about the Good Samaritan, and with much to distract them. They were on a business trip, but they move from fear and greed to gift and gratuity. Fear and greed are overcome so that the solidarity of human existence is realised through reciprocity, and, incidentally, benefitting the economic interest of a local hotelkeeper. It is a reasonable analysis; I don't know why you are laughing.

At the heart of the parable is the question, "Who is my neighbour?" It is taken for granted in Jesus' answer that it is a question that matters - that whether we are individuals or corporate bodies, relating to neighbours, being linked into a wider network than ourselves, is of huge importance - and the answer is the one who helps.

Now the social and geographical context.Recent development of banking in the UK poses the same question, I think, to all our financial industry - to each of us. But this evening in the context of the banks it demands an answer based not only in stakeholder jargon, but in the sense of body and belonging. Goodness is the result of serving our highest interest, not of limiting our obligations.

Coming back to London as a born and bred Londoner, as is my wife, but with a gap of 24 years since we moved north, is a great shock. It is a nice shock, but it is a shock. London has certainly not deteriorated; quite the reverse. It has as much buzz and excitement as New York, Hong Kong, or any of the world's other great commercial cities. It is unimaginably more cosmopolitan than when we moved away.

But it is also a bubble. There is wealth and economic activity here that is not replicated in most of the United Kingdom, a fact with which we are deeply familiar. Even when areas like Liverpool and Newcastle, the North East and North West grow economically, they still on average grow slightly less fast than London and the South East, and the wealth gap increases. The bubble effect results in many ways from the sufficiency of the city, and the banking industry especially, to itself. It is hugely successful. It is the world's greatest centre of international finance, of foreign exchange trading, of derivatives of almost anything else you care to name in that area. It is innovative, brilliant. It draws in the best talent from around the world. It is a buzzing place.

But it can end up with self-regarding activity, like that of the Levite and the priest in the parable, and lead to a culture of passing by - of the world going on as elsewhere the journey of banking continues. It is also a place that has generated a product that has overwhelmed the UK economy. The product I mean is finance, and that brings us straight back to banking. The Good Samaritan is now trading so fast with high frequency trading, moving so fast by car and plane, that she or he no longer even sees the victim.

It is certainly arguable that the power of international banking in London - and when we talk about banks, we need to remember that this is the greatest world centre of banking; we cannot just talk about UK banks - that the power of international banking in London means the UK economy has a centre of productivity, invention and energy that is not replicated elsewhere in the country.

In a dystopian mood, it would be possible to imagine a future in which the international banks remain in an ever more prosperous city, with ever higher property prices, in which the needs of the utterly cosmopolitan population are served by the disenfranchised residents of the surrounding countryside - what in Sparta were called the Helots, the Serfs, who returned to their poorer villages and towns in the evening, having done their work for the day. The only difference from ancient Sparta would be that the lifestyle in London, whatever else one may say about it, does not seem to me to be especially Spartan.

Let me give you another view of wealth and money. I quote:"A great torrent rushes in thousands of channels through the fertile land. By a thousand different paths make your riches reach the homes of the poor. Wealth is like water that issues forth from the fountain. The greater the frequency with which it is drawn, the purer it is, while it becomes foul if the fountain becomes unused."

That citation from St Basil the Great, who lived between 329 and 370, one of the great early theologians of the Christian church, was not about simply giving things away, but about business and its service to society.

Against the risk of a bubble within the UK economy which is too big to fail, and which cannot be regulated without fear of devaluing banking or causing it to move, is this dream, this possibility of wealth as life giving water spreading through all the channels of our national and global economy, from the great well of talent and prosperity that is London.

The usually implicit assumption that profitable companies make for a flourishing country needs challenging in that context. Profit and good return is a necessity, but it is only a means to an end: the end should be human flourishing. I do not believe that can be or should be the responsibility of government by itself, or arguable even principally. Bringing about human flourishing is a task that binds together the whole of our society, and from which no one can be excluded, voluntarily or compulsory if it is to happen.

The common good requires the fullest possible participation in society by all people. The result is that legislation and regulation should foster participation across society, so that people and institutions in all sectors, especially banks because of their power, work together for the common good, and selfishness is driven out. If we want a genuine common good, a society where we can see solidarity between people and participation by all people, then we all need to act in ways that will contribute to that good, whether we are individuals or great corporations.

Benedict XVI in his encyclical Caritas in Veritate two or three years ago said this: "Development is impossible without upright men and women, without financiers and politicians..." - there have got to be some around somewhere - "whose consciences are finely attuned to the requirements of the common good." In other words, to move from dystopia to utopia - though we won't get there - this means that good banks must have values of integration into society, mutual service to all other parts of society, reasonable but not excessive profitability, and the effective but measured distribution of wealth, to ensure high levels of investment in sustainable products and things that are good.

To put it simply, wealth should be held adventurously and generously. Generosity is seen in being a good neighbor. It is not only shown by giving things away as the Good Samaritan did, but also by investment, the moving of the water of wealth into fresh channels.

The impact on banking of the vision of St Basil or Pope Benedict is that there should be a deliberate, self-designed popping of the bubble of inward looking self-regard. There needs to be a significant challenge to the ultimate value of all the activities undertaken in a bank. Are they self-regarding, or do they result in wider participation in the common good? Lord Adair picked this up very powerfully a few years ago.

All these comments, though, so far in this talk, deal with the objectives but not with the inner structure of a good bank. In 2008 during September and October we faced systemic failure. The words 'system' or 'systemic' kept pushing their way into our vocabulary. System failures within banks had lead to the systemic failure of the banking system. Systems are things around which there are calculation, but in the church we are used to using another metaphor - the metaphor of bodies. One used, incidentally, very powerfully also by Hobbes in Leviathan.

We have done it in the Church ever since St Paul used it to tell the troublesome, quarrelsome and argumentative church in Corinth - isn't it encouraging that nothing changes - to stop fighting and start working together. It is a metaphor, the body, that shows us how people and institutions can work together so that they all flourish, and warns about the risks that follow if one part of the body takes over.

If we are to have good banks, we need to move away from a culture of looking at systems to a culture of considering organisations as bodies, and using that to drive the way in which there is governance and responsibility, and loyalty. The way we treat problems and analyse them determines the outcomes we achieve. We need our fundamental understanding of organisation to be one that nudges us in the direction of virtue, and not only efficiency.

How we regard structures, the value of technology, the impact of remuneration - and this is particularly important, the spiritual and personal impact of trading only in intangibles as the principal activity of an economy, or the principal sector of an economy - are all things that make much more sense when put in the context of a body than an organisation, an institution, or a system.

Look at the impact of failures in systems and failures in bodies. The biggest difference in appreciation of problems within a body is that in a body, when something goes wrong, every part knows about it. It hurts. If I dent the car, or I should say rather when I dent the car - it tends to be me in our household - I am extremely irritated. It matters to me. It will be troublesome and it will hurt my bank balance. But if I dent myself it is a different matter altogether. It is much harder to beat out a dent in my arm than in the front offside wing.

You will be very able to come up with your own list of symptoms of trauma to the body. Concerns about the breakdown of cooperation and trust such as we saw in 2008 and 2009, about the instrumentalization of human relationships - whether they are clients or employees - have been voiced by many. The worry is that we have stopped seeking human flourishing, because we have stopped enabling human creativity to participate fully across the whole enterprise that is the banking sector.

Take an example. In the last 10 years, banks adopted remuneration policies that meant that a relatively small number of employees took such a large part of the overall revenues as to make it impossible for the widest number to benefit - or for there to be adequate capital, in some cases, for the enterprise to remain self-sustaining. This is a matter whose seriousness is seen much more clearly through the metaphor of a body than of a system.

Think of what happens when blood ceases to flow around one part of a body. Unless urgent action is taken, the whole thing can be permanently damaged - even lost.

So what are the things that make for a healthy body? Participation will result in the parts of the body that first spot a problem being freer to raise their concerns, the equivalent of a stab of pain or a building fever. A corporate culture of participation encourages people to raise issues, because they will feel some sense of responsibility, even if they are in a different of the body.

You do not regulate the body except in the most general sense. You learn habits that make for its general flourishing. A change of approach like this would be a major challenge not only to issues such as remuneration, but the whole core sense of who we are, how we work together, and what we are for. It means that problems would lead to a valuation rather than calculation, mere consequentialism. Evaluation leading to challenges to train and renew, to heal in other words, rather than calculation leading to the elimination of bits of a system that don't seem to be producing the desired return.

But at the heart of good banks have to be good people, and if we want good banks we have to believe in fallible people, not infallible people. Having an anthropology, and idea of who the human being is that is both realistic and optimistic, is something that springs from the Judeo-Christian tradition - in fact from the very heart of the Christian understanding of why God came as Jesus to live on this earth and offer hope and salvation to all humanity.

If we believe in fallible people, we will work on aspects of behaviour and training that condition the body, that recognise that human beings are both more fallible than a systemic regulatory system will allow, and have greater potential than our pessimism might permit. The biggest weakness of all in the analysis of the failure of banks to be good banks has been around understanding about human beings.

We have looked at banks - if you will excuse a bit of theology in a cathedral - as though sin did not exist and redemption and salvation were not possible. We have been neither realistic about fallibility, nor optimistic about potential. I think banks, to be good, need the fear of hell and the hope of heaven; not merely the fear of penury and hope of a larger bank account.

This talk has tried to be mainly around context and values, seeking to suggest ways forward for the creation of culture and standards in an entirely international centre - in which good is something that is understood differently by people depending where they come from, who they are, how they have been brought up; all the different wonders and marvels of our international culture. St Basil's powerful quotation sets a vision of a world in which finance flows through effective and generous banks to enable fallible and creative human beings to reach their potential. There will never be such a thing as perfectly good banks, because in the end no human being is of themselves perfectly good. But we can have potentially good banks, banks that live with a culture that is self correcting and self learning, a culture that is more like a body than a system, and so develops the conscience, will and direction that enable the common good.

We see deep differences in wealth and potential at the moment. They are differences that can be eliminated, but they cannot be eliminated without good banks.

Thank you.

© Justin Welby 2013

About this author

St Paul's Institute seeks to foster an informed Christian response to the most urgent ethical and spiritual issues of our times: financial integrity, economic theory, and the meaning of the common good.