Dull dependability leavened with an appetite for risk

While the West raised a generation aspiring to Gordon Gekko, France took another route, humbled by its own 1990s economic crisis.

I have long maintained that bankers should be boring. Not so long ago, they were. Dull and dependable, reminiscent of aged gardeners on dukes' estates, they used to dodder about with wispy hair, strange cardigans and dodgy knees from too much bending down and weeding. It is always good for a banker to get his hands dirty, that way he knows what is really going on. But something happened about 20 years ago to change all that. It could have coincided with the launch of Oliver Stone's satire Wall Street, on the excesses of the 1980s. A young generation watched the film and instead of deciding that they wanted to be Charlie Sheen's character - who, let's face it, is a bit of a loser - plumped to be the next Gordon Gekko. "Greed is good," they chirruped, and off they went. We all know what happened next.
But not in France. Maybe it's because "Rue du Mur" didn't sound very catchy, or because France had its own banking crisis in the 1990s when Debit Lyonnais, sorry Credit Lyonnais, went spectacularly bust. Or perhaps France was able to produce a superior sort of banker. Last week, I was invited by BNP Paribas to its annual press shindig. It's the largest bank in France and one of the few European banks not only to survive the financial meltdown unscathed but to emerge with their reputations enhanced. The bash began in rather splendid style with a tour of the Sorbonne, which was followed by a drinks party in one of the grand rooms. As the parquet floors creaked beneath us, and waiter after waiter came around with tempting delicacies, I chatted to a few of the top brass before chancing upon the main man, one Badouin Prot.
With his grey hair, steel-rimmed glasses and rather formless suit, he looked more like a university professor than a banker. No red braces, hair gel or blue shirt with white collar for him. Armed only with a canape, I approached him to share my theory about why bankers should be more boring. "Not so," he said. "I keep hearing about how bankers should avoid risk. But if you want to avoid risk, you should not go into banking. We need to be risk-aware but not risk-averse. It would be like being in the railway business and not liking trains. Ten thousand people in my bank work on risk.
"Personally, all the bad debts of more than €1.5 million (Dh7.5m) come by me. I chair the risk committee. The bankers who made the bad loans must explain where they went wrong." This sounded rather good. I was impressed by his train metaphor, and by his willingness to talk about bad loans, unlike most bankers who prefer to sweep them under the carpet. Despite his penchant for risk, carefully managed of course, he sounded like a French gardener, and I immediately warmed to the fellow. I returned to my journalist pals, who had been seduced by the foie gras and figs and failed to spot the chance for an exclusive chat with the great man.
"What did he say?" they asked. "Oh, you know, very little. Typical banker," I replied, rather pleased with my scoop and unwilling to share it with them. Next day, we all assembled in a giant building just off the Boulevard Haussmann. This was a grand affair with a facade reminiscent of the Gare de Lyon. Mr Prot made a presentation about BNP Paribas. Its growth has been impressive. If every company in France had increased its workforce at a similar rate, there would be no unemployment and they wouldn't be wasting their €300 on sending Roma migrants home but would be importing them instead. A staff of 80,000 10 years ago is now 201,000 strong, and showing no sign of slowing.
As the fog cleared from the financial gloom last year, BNP Paribas snapped up Fortis Bank, which was then Belgium's biggest company. It had invested heavily in sub-prime debt and was sinking fast, but now recapitalised, the business is growing. Mr Prot pointed out with the help of slides how his bank avoided most of the icebergs of the crash. "If you don't have a strong cash flow and the cost of risk goes up, that kills you," he said. "When banks were paying 10 basis points for funding and buying high-yielding assets, they were making a fortune. But then the cost of funding went to 200 basis points and the assets became worthless."
He blames the Americans "100 per cent" for the financial crisis. I was beginning to think this was the most enjoyable bank presentation I had ever heard (as you can imagine it's not a very long list), when he went and spoilt it. "Risk-aversion leads a banker nowhere," he said. "Loans is to banking what trains are to railways. If you never fail, you're not in business, but if you have too many bad loans, you're not here on Monday."
I saw my fellow hacks spring to life when he made the reference to trains and start scribbling furiously. He had spoiled my scoop. A good banker, but needs to change his metaphors more often. He left the meeting briskly clutching a briefcase, eager to get to work, and was driven off in a small blue Peugeot, no doubt thinking of trains and risk. He may have spoilt my story, but if I were a shareholder in a bank, I'd want him as Fat Controller.
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