An accountant who compiles annual financial reports for a bank talks about being tarred with the same brush as bankers• This monologue is part of a series in which people across the financial sector speak to Joris Luyendijk about their working livesShe wrote in pointing out that there still wasn't anyone from group financial reporting, which prepares a bank's annual report, financial statements, results announcements etc. She is a soft-spoken woman in her late 20s, quietly confident in the way accountants often are. More than once she wonders whether it's interesting enough – a sentiment no trader or front office deal maker has ever expressed to me."What animal are group financial reporting people? A springbok? Pretty mundane, operate in groups, quite nice. We're a bit slower though. In group financial reporting you find people who try to do things properly, who fear getting it wrong. We are industrious … Maybe beavers?"What would shock your readers if they saw what I see every day? How it's just a normal office environment. Normal people. Not loud. Not arrogant. And not overpaid, at least not us. If I found a similar job in another industry, I'd make maybe 10% less. At most."I think banks pay ludicrous money to some of their people, far too much. But this is not a problem limited to banks. You only need to look at CEO salaries in the FTSE 100. So I don't think a cap would be the right way to resolve this. I ask, why only bankers? Why only in the EU? I do think we need to maintain a level playing field to compete internationally. Across all industries the problem is the differential between those at the top of the pile and those at the bottom. Hopefully the increasing expectation for companies to disclose this information will shame them into equalising pay, although it doesn't seem to be working so far. I would like to emphasise that the vast, vast majority of people who work in banks receive normal levels of pay."When I began, everyone told me that a bank was a really good starting point for an accountant; after that you can go anywhere. But this was before the crisis. Right now it actually seems to work against me. I have been trying to find a job away from financial services, but I can't. There are fewer jobs, sure, but it also really feels like other industries consider me 'tainted'."An example: recently a recruitment consultant put me forward on a shortlist for a role I was interested in, reporting group numbers for a non-financial services company. The consultant had been briefed that they didn't mind what industry the applicant was working in currently, ie no need to have experience in that company's industry. The role looked perfect for me – pretty much exactly what I do in my current role. The recruitment consultant said I had a very strong CV showing a lot of the things they were looking for, right number of years' experience etc. As it turned out, I was the only person on the shortlist that wasn't asked to interview. The reason they gave to the recruitment consultant was they didn't want someone from a bank as they wouldn't fit into their culture. They'd never met me and made assumptions about my character purely based on where I currently work."You ask why I chose to volunteer for this interview. This is the reason. I feel that banker-bashing has gone too far. On a dating site you'd better hide that you're working in a bank or you'll have no chance. With my family it's worse. They are all fairly leftwing; I am fairly leftwing myself. My family don't seem to realise how upsetting it is for me to hear their endless criticisms of the banks. And you know what? I agree with almost all of what they're saying. Yet I feel this strange need to argue. For instance when people complain that 'the banks are not lending'. Look, the financial crisis was caused by banks making loans that couldn't be paid back. Is it any wonder that the banks are now being cautious about lending? And wouldn't we be saying they were being irresponsible if they weren't?"I suppose the banker-bashing serves the media in the sense that it produces good copy. And it serves the vested interests in government as it deflects blame from them. Also, the sort of people that you would want to work in a bank are exactly the sort that are being driven away from the industry because of the banker-bashing. I feel that, if we accept that banks need to exist, then we need to allow for some people to work in them without being made to feel like villains. The sort of people who take the banker-bashing to heart are probably the same people who take the responsibilities of their job seriously."As the group financial reporting team/function we pull the numbers together across the bank. We look at variations month-on-month and year-on-year, and we construct a narrative why income went up or down. This is fed straight to the bank's chief executives."We work with both the retail and the investment banking side (we don't really deal with what you'd call 'investment bankers', we deal with the finance team in the investment bank – so they are accountants rather than bankers). The latter are far more secretive, displaying a 'you don't need to know' attitude and making us feel as if it's them who are in charge. They seem to want to drive the agenda and make sure the messages coming out of their department are being portrayed in the way they want."In most companies group financial reporting sits above all finance teams working in that company. But in some banks where the investment bank makes most of the group's profits, it doesn't feel like that at all, it's more as if we're this side-show for them. People in my team can feel too intimated to properly understand the numbers as they feel like 'it's not my place to ask'. Before the crisis of 2008 we had very little insight into the numbers in the investment bank. These days that's very different, we are definitely more empowered to ask the questions that need to be asked."Are the big banks projecting an illusion of control? That's hard to answer. I know most people would shoot me down for saying this, but I do ask myself, how on earth can people blame a CEO when there's a scandal? Given the size of banks all a CEO can be guilty of is delegating to the wrong person. How can you possibly have oversight of a 100,000 employees? The bank is so big. We have so many loans on our books. How much credit risk is there (chance of loans not being paid back)?"The accounting standards are absolutely crucial here. When do you have to recognise a loan as 'impaired' (unlikely to be paid back)? That is something that is dictated to us and, as it currently stands, we aren't allowed to recognise a loss due to a loan defaulting until it has pretty much happened, even if we think it's very likely. This is now being changed as a result of the financial crisis so that we recognise these losses earlier."In group finance for a large bank, I wonder if we can ever be close enough to the numbers to really know what's going on. You have got the trader, who passes the information about his trades on to a 'product controller', who passes it on to the finance team in the investment banking operation, who then pass it on to us. That's a lot of layers."I have been doing this job for somewhere between five and 10 years, in two different banks. I want to stress just how utterly different the culture was in those two banks. One was 'get the job done', the other 'get the job done right'. In the more cut-throat bank there was more dynamism, more opportunities to develop yourself and far less tolerance for inefficiency. The downside was the expectation to put your job before anything else, working late into the night and weekends for weeks on end, and to get the job done without making waves by expressing any kind of reservations."I am sceptical about ringfencing retail and investment bank operations. The retail bank's business cycle tends to run differently from the one investment banks are in, and they balance each other out, meaning having both could actually contribute to stability. The argument for ringfencing is to protect customer deposits. However, generally speaking, while the retail bank is self-funded through such customer deposits, the investment banking operations are independently funded through the wholesale markets. In other words, your savings account is not being traded in the foreign exchange markets, it is allowing the bank to provide someone else with a mortgage. Also, splitting up big banks will involve huge costs. And ringfencing would have made no difference to the banks that went under during the crisis – Northern Rock, which memorably saw the lines of customers queuing up to get back their cash, did not have an investment banking arm. The real problem with banks is their massive leveraging."The auditors (external accountants from the 'big four' firms) are an interesting group. They are meant to be an external check on the bank, signing off on our books. But it's almost like they work in the bank. They have their own desks, sometimes with personal stuff up. It makes sense as they spend all their time in the bank."The argument is that it would be incredibly costly for a different accountancy firm to come in every time because banks are so complicated and finding your way around costs a lot of time. I can see that point, though the juniors in the external auditor's teams constantly change anyway. External auditors have effectively set up an organisation that's a mirror to ours. They work with us, we both have an interest in getting everything ready in time. Suppose the external auditors came out and said: 'Sorry about this but the quarterly results will be three days late.' Imagine what that would do to the share price.When it's that time of the year and the deadline is close I work late every evening, Saturday, Sundays …"I believe external auditors should be assigned by the government, and change every few years. How can they make independent judgments of us when we are their biggest clients? I can see what your external auditor interviewee means when he says that in a way he is 'incentivised not to find anything'. How it works is you show external auditors a piece of paper with the number on it that they're looking for and they go: OK. I mean, to know what that number corresponds to you'd have to see evidence, you'd need to have a breakdown of how the business unit operates. Given how unintrusive external auditors are we could have a whole separate accounting system without them knowing."You could call what we do a ritual, I guess. Every season we do the same thing, to a set timetable, leading to the same results that allow the bank to say: look, it's under control. The problem is, nobody really understands the banks any more, and that includes insiders. We are meant to understand the bank, and show the numbers illustrating that understanding. In reality it's almost the other way around, we have a process in place to collect the numbers and if that collection takes place properly, every step is followed, then the outcome is recognised as legitimate. It's a legitimising operation."It will take some adjusting, if and when I leave financial services for another industry. In my bank I work with balance sheets containing billions or even trillions. The margin of error is easily a million."• If you would like to comment on this interview, please visit the accompanying blogpostBankingAccountancyFinancial sectorJoris Luyendijktheguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
↧