The following is excerpted from Ingrid Hauge Johansen’s illuminating report, The City of London Corporation and Lord Mayor in the Global Financial Crisis. Johansen writes :
In Japan, many banks see their responsibility as being split between shareholders, customers, the workforce and country as a whole; even leading to loans at uneconomically low rates. The reports [from the Lord Mayor’s office. DH] note that:
Japanese banks prefer to adhere to traditional values of preserving relationships rather than insisting on shareholder value. They see their responsibilities split evenly between shareholders, customers, their workforce and their country ‘Consequently some lending is at uneconomically low margins.’
However, a rare opportunity to influence this traditional Japanese system presented itself in 2006, when the country’s incumbent Prime Minister was replaced by Shinzo Abe, who was considered to be less economically savvy. In the report from the visit by the Lord Mayor in September 2006:
It was suggested Abe’s financial and economical inexperience would lead him to accept the advice of experts – this could be encouraging.*
* Report by The Rt. Hon. The Lord Mayor (Alderman David Brewer CMG) on his visit to Japan and Northern China, 31 August-16 September 2006
Beware of experts from the City of London, if you want your banking sector to balance the interests of ‘shareholders, customers, the workforce and country as a whole’. In fact, perhaps the City should absent itself from future debates about banking reform, in light of its track record, as documented by Johansen.