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Welby quizzes UBS bank traders over Libor rate-rigging

18 January 2013

KEITH BLUNDY/AEGIS ASSOCIATES

Wheeled out: Bishop Welby at the opening of BikeStop, in Skinnergate, Darlington, a new charity project that recycles old bicycles

Wheeled out: Bishop Welby at the opening of BikeStop, in Skinnergate, Darlington, a new charity project that recycles old bicycles

THE Bishop of Durham, the Rt Revd Justin Welby, has joined other members of the Parliamentary Commission on Banking Standards to question former executives of the Swiss financial services company UBS ( News, 20 July).

The bankers were giving evidence, on Wednesday of last week, about the Libor rate-rigging scandal that earned a £940-million fine from the Financial Services Authority (FSA).

Bishop Welby - who, Lord Williams of Oystermouth suggested, would be a "far more effective contributor" to discussions about finance - said that he had been "stunned" to learn of the corruption at UBS. Forty-five people there had been involved in manipulating the Libor rate between 2005 and 2010, and had shown "total disregard for proper standards", the FSA had said.

An "internal drive for excellence" was "almost entirely absent" at UBS, a "corrupted organisation", Bishop Welby said. "Pervasively through the organisation, people must have known that things were not quite right; yet nobody objected. Where is that professional attitude going to come from?"

The new head of investment banking at UBS, Andrea Orcel, admitted that, across the banking industry, "we all got probably too arrogant, too self-convinced that things were correct the way they were. The industry needs to change."

Bishop Welby asked Mr Orcel why he was "the person who can turn it round", given that he was previously employed by another bank with "massive cultural and ethical issues", the Bank of America, which recently paid the United States government £7.2 billion after being sued for selling "toxic" mortgages.

Mr Orcel said that a "limited number of people" were responsible for malpractice at UBS, and that "many people were appalled, upset, angry that their own reputation was dragged down by the acts of others."

On Thursday of last week, Bishop Welby questioned Alex Wilmot-Sitwell, the former head of UBS investment banking, who is now head of European operations at the Bank of America, and pressed him on how "ethical construction" was undertaken.

Mr Wilmot-Sitwell said that there had been a "massive reinforcement of ethics and culture and behavioural tendencies within organisations. . . There is a recognition that there is a massive hill to climb in terms of recovering that reputation, rebuilding integrity."

In an article for the financial news service Bloomberg, published on Thursday of last week, Bishop Welby wrote that he was "reluctant to cast blame" for the collapse of the banking system, but "responsibility needs to be taken, and structures created that lean toward virtue rather than vice."

He suggested that the "jury is now out as to whether . . . financial services have been a net benefit to the UK economy as a whole". It was "virtue and leadership embedded within corporate cultures", rather than regulations, that prevented malpractice, he said.

 

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