A few weeks ago, I attended the debate ‘The City’s reputation in Europe: Seriously damaged or an opportunity for change?
Organised by the City of London Guild of Public Relations Practitioners and the Association for Financial Markets in Europe (AFME), the debate examined the important and thorny issue of how to restore the City’s reputation in Europe.
The panel consisted of four speakers: Simon Lewis, Mark Field, Hugo Dixon and Roland Klein, all with different perspectives on the reputational storms that the City has weathered and how they can be avoided in the future.
Several interesting points were made during the evening, both in the panel members’ initial speeches and the debate that followed.
Key themes included:
• Politics, the key to the City’s reputation. For most speakers, the current and future reputation of the City of London is entirely dependent on several political decisions. The possibility of the UK leaving the EU was seen as a great risk for the future of the City, largely intertwined with the outcome of the Scottish referendum.
• A loss of opportunity. Bankers in high positions may have changed after the financial crisis 2008, but did not fully demonstrate a willingness to do so. This was an underleveraged opportunity as banks could have stepped ahead of the reputational curve by demonstrating a greater commitment to change.
• A skewed reputation of the city? The speakers agreed that the tarnished image of the City of London during the financial crisis derived partly from a skewed media representation, and prevailing negative stereotypes. Some alleged crimes during the financial crisis are still unproved.
Simon Lewis, Chief Executive of the AFME and the Global Financial Markets Association, previously the Prime Minister’s Official Spokesman, kicked off the presentations. His speech questioned the accuracy of public accusations against banks in the City of London, and whether the reputational damage they faced was fully legitimate. Negative stereotypes such as ‘bash the bankers’ were, according to Lewis, grossly exaggerated and fuelled by media. Furthermore, he pointed out, even though many perceive banks as villains it should not be forgotten that investigations have just started. The outcomes are not yet determined and Libor and FIX issues still remain unproven.
Lewis also pointed out that banks do make an effort to improve their reputation. We have witnessed a renewed emphasis on ethical conduct; the days of enormous bonuses are long gone and a new generation of leaders pave the way for sustainable banking. To encourage this positive change, Lewis argued that we need to bridge the gap between the perception and reality. In other words, ‘The longer and harder you squeeze, the less chance there is of creating sustainable change’.
Mark Field, Conservative MP and regular commentator on current affairs maintained that the reputation of the City of London largely depends on political, rather than financial, challenges.
Field pointed out that even though experts declared the death of capitalism in 2008, the City of London is still the premier financial hub in Europe. Its ability to attract business, investments and aspiring employees is unparalleled even by cities like Zurich and Paris.
It is the political landscape we should turn our heads to, according to Field. In his discussion, three main challenges were brought up: the future of the European Union, the outcome of the Scottish referendum and the outcome of the UK national election in 2015.
With regards to the EU, Field argued that it is wishful thinking to believe that the City of London will be unaffected by developments in Brussels. Should the UK leave the EU, its bargaining power in the world and reputation as the world’s financial hub will significantly diminish. This challenge is intensified by a potential Scottish independence, which would increase the percentage of Eurosceptics in the UK and inspire others such as Ireland to follow lead.
In the upcoming national election, Field claimed that the city should worry about the potential outcome of a labour victory for the regulation landscape in the UK. Overall, Field asserted that the future reputation of the city will lie in the hands of British citizens and the votes they cast.
Hugo Dixon, Editor-at-Large, Reuters News, author and regular commentator of financial and European affairs, held the conviction that the City’s future reputation will be determined by developments in the European Union.
2015 is the year that we need to start thinking about reforming our relationship with the EU. If we withdraw, several challenges will follow. The most important one, according to Dixon is a loss in opportunity. A lost seat at the table of the EU would mean leaving decisions into the hands of others that may have conflicting interests. The UK would also miss out on several positive reforms that are taking place within the EU, such as president of the ECB, Mario Draghi’s recent imitative to revive the securitization market. Coupled with other efforts to encourage more non-banking alternatives into the financial landscape, it shows that Europe is paving the way for change. According to Dixon, it would be foolish of the UK and the City of London to miss out on this opportunity.
Finally, Roland Klein, founding partner of consulting firm CNC, looked at the City’s reputation from a German perspective. Initially, he rightly pointed out that the reputational damage that the City of London during the financial crisis was not unique as banks in Frankfurt and other European cities were facing similar problems. Yet, because of the magnitude of the City of London, and its previous position as the dream destination for aspiring bankers across the world, it has been under greater scrutiny from the press.
The myths surrounding the City made it the most newsworthy target for criticism, or as one German newspaper pointed out ‘an oasis for financial acrobats’. Comparing the level of public interest in a Mercedes compared to a Fiat, Klein also pointed out that the ‘threshold for scandal’ is lower for London banks, than others
So, what did we take away from the event?
Don’t wait for a crisis: Solid reputational management should not be in response to a crisis or scandal. Rather it should be built into the foundation and core pillars of a business.
A crisis is always an opportunity for change. When facing a crisis, communicators should see it as an opportunity get ahead of the curve, and beyond stakeholders expectations. This allows them to set the parameters for the debate.
Challenge media stereotypes: If an industry is misunderstood or misperceived by the media and other stakeholders give them good reasons to believe that you are more than you think. Demonstrate commitment to change and educate stakeholders.
Communicate with and around issues that indirectly influences your business: One of the main communicative challenges for the City of London is to ensure that people actually understand the crucial role that politics play, and to communicate directly with political bodies. Every industry and company has a different stakeholder map that needs to be fully taken into account.
For sure, the speakers were right in discussing the future of European Union as a key driver of reputational risk. A couple of weeks after the event, the results of the EU elections are headlining in the news. Across the continent, the trend towards Euro-scepticism, extremism and anti-immigration is startling. Media has quickly pointed out winners and losers among the parties, almost mirroring the blame game post-2008. The EU’s reputation is, like the City’s, on the verge of being seriously damaged. Since the futures of both institutions are so intertwined, the question is if they will take these opportunities to truly change. One thing that is evident is that politics, negotiations and regulation will continue to play their part in the roundabout of reputation.