See, that didn't hurt at all.

Photographer: Brendan Hoffman/Bloomberg

Time for Bankers to Start Swearing

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Psssst! Bankers! Wanna swear an oath? The Dutch Banking Association has one for you:

I swear within the boundaries of the position that I hold in the banking sector

  • that I will perform my duties with integrity and care;
  • that I will carefully balance all the interests involved in the enterprise, namely those of customers, shareholders, employees and the society in which the bank operates;
  • that in this balancing, I will put the interests of the customer first;
  • that I will behave in accordance with the laws, regulations and codes of conduct that apply to me;
  • that I will keep the secrets entrusted to me;
  • that  I will make no misuse of my banking knowledge;
  • that I will be open and transparent, and am aware of my responsibility to society;
  • that I will endeavor to maintain and promote confidence in the banking system.

So truly help me God.

If you’re a banker in the Netherlands and you want to keep your job, you are now going to have to say this. Well, you’ll say it in Dutch (the translation above is mine, but was influenced by others, including Google’s). And you are welcome to replace the “so truly help me God” with a “this I declare and promise” if invoking a deity discomfits you.

The oath requirement, which has applied to bank directors and top managers since January 2013, went into effect Wednesday for all 90,000 Dutch bank employees, who now have a year to say it or get out. Mass oath-recital ceremonies are planned at several banks. At NIBC Bank in The Hague, employees recited the oath in front of a mirror, then signed the mirror.

Meanwhile, executives at ABN Amro, the big Amsterdam-based bank that was merged out of existence in 2007 (parts went to the Royal Bank of Scotland, Fortis and Santander) then partially reconstituted under Dutch government ownership after the financial crisis, are being criticized for behaving in a manner inconsistent with the oath. That is, six top executives of the bank got 100,000-euro pay raises (to base salaries of 707,500 euros) last year.

As a result, the bank’s initial public offering has been indefinitely postponed, and parliamentary hearings are in the offing. The executives have given up the raises, which by Anglo-American financial-industry standards were pretty small, and to an outsider the whole controversy seems to be mainly political theater -- a chance to beat up a little on Finance Minister Jeroen Dijsselbloem and on one of his most prominent predecessors, Gerrit Zalm, who is now ABM Amro’s chief executive officer (and didn’t get a raise).

Still, on the Dutch radio news show "Met het oog op morgen" Tuesday night, Hans Ludo van Mierlo, a former lobbyist for the Dutch Banking Association and before that a spokesman for several banks, said the outrage was justified and that ABN Amro’s executives had made the mistake of “thinking harder about earning than about serving” (that rhymes in Dutch).

I was listening to a podcast of this while walking to work this morning along New York’s Central Park South, a street populated by people who may or may not serve but are definitely very good at earning, and my initial reaction was that it was pretty naive. But then Van Mierlo told a compelling story of how the financial sector used to be divided into institutions with specific purposes -- in the U.S. you had savings and loans, commercial banks, investment banks, wirehouses and so on. Then, usually for good reason, the barriers between different kinds of financial institutions began to come down and their purpose became less clear. A few people in the financial sector found new purposes -- such as spreading economic opportunity via microfinance. Many others came to see the entire purpose of their profession as making money. That was a problem, Van Mierlo said, and it was what the oath was intended to address.

This is one of those interesting things about business. It’s about making money, but if it’s only about making money -- devoid of purpose or rules or ethical standards -- then it doesn’t work nearly as well. It’s especially true of finance, which I think is why there have been so many conventions and rules restricting what particular financial institutions are allowed to do. Such boundaries can often seem archaic or even irrational (case in point: Glass-Steagall). Lose them all, though, and you become, in Matt Taibbi’s indelible if zoologically suspect description, “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

So now, after the financial crisis, we see attempts to restrict just where that blood funnel can go. In the U.S. we get the Volcker Rule restricting speculative trading by federally insured banks, and we might get rules requiring brokers to act as fiduciaries for their customers. In the Netherlands (and Australia, where it’s voluntary, and maybe someday other places), we get bankers swearing oaths. I’m not sure any of this will work. But I get where it’s coming from.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net