How best to sum up the atmosphere in the City over the past week? There is deep concern over this latest blow to the reputation of the banking sector and – more importantly – also fear that it will weaken the attractiveness of London as a financial centre.
In the five years since the run on Northern Rock, one might think the City of London has become inured to banking scandals. The rise and fall of the big banks became an all too familiar tale of the consequence of hubris in the Square Mile. But I believe that, after five years of alarm bells sounding, the Libor scandal may finally have woken bankers to the truth. The boom years have gone. The golden era – as some would see it – has passed and the future for banks, and to a lesser extent the City, is dependent upon finding the right model, and critically the right culture, for this new challenging age.
None of the revelations over the last week means that the City is inherently corrupt. It has many fine institutions (including banks). But these revelations do call for fundamental reforms in the governance of the banking sector. I am self-interested – as chairman of the world’s biggest insurance market, Lloyd’s of London, I do not want to see more collateral damage from parts of the banking industry.