The Moorad Choudhry Anthology, + Website

CHAPTER 16Strategy Setting: Principles for Sustained Bank Viability

Source: Impact School Improvement (@ImpactWales) 2010. Used with permission.

Not every bank possesses the luxury of having a “strategy” department. Many banks don't even have a single person tasked with carrying out the role of strategist, let alone an entire department. But here's a paradox: the very large banks, which often do possess significant strategy human resources, rarely generate their actual medium‐term directional goals from work produced by these teams. It wasn't someone in the RBS Strategy team who thought it was a good idea to acquire (the rubbish parts of) ABN Amro, or someone in HBOS Strategy who suggested they fill their boots with commercial real‐estate assets. Likewise the excesses observed at Lehman Brothers in the run‐up to its demise, or the Latin American bad debt lending of a generation earlier, both had “CEO” written all over them. Banks generally leave, by accident or design, their strategy setting to the CEO and a small coterie of his (it's usually a he, historically for failed banks anyway) in‐house colleagues. Medium‐term direction and specific projects are sent upwards for Board approval, but this review process is not necessarily a major hurdle, particularly with the composition of Boards and the character of non‐executive directors being what they have been hitherto.¹

Banks' so‐called ...