Bank problems are bigger than PR
Are banks “un-PR-able?” In the wake of Lehman, subprime, AIG, TARP, TBTF, feasting at the discount window, Libor and the London Whale (the list could go on and on), the answer is probably yes. The complexity of financial products and the scope of the large banks’ operations means that it is not a question of if another scandal will emerge, it’s a question of when. From standpoint of reputation, there is no way to effectively assess and mitigate the multiple risks inherent to global banks.
So what’s a PR guy at [insert name of global investment bank] to do?
Lucas van Praag, former head of corporate communications at Goldman Sachs recently spoke with PR Week about the options. He suggests says that banks need to fight off the instinct to withdraw into the bunker and just focus on corporate social responsibility initiatives. “CSR is important, but [banks] shouldn’t rely on it to repair reputation,” he tells PR Week. Explaining, Goldman’s sometimes confrontational media strategy, van Praag explained that the common link between the firm’s key audiences, including shareholders and regulators, was that “all got most of their information from the media,” meaning that a do-nothing approach was out of the question for Goldman. He goes on to say that “culture is driven from the very top. Banks need to take the initiative to reset the moral compass, and do it often.” The Financial Times echoes this in a recent column, but was more direct, saying it might be “necessary to retire this flawed generation of [bank] leaders.”
Clearly, not all banks have the stomach to spar with media like Goldman once did. In the November 16 issue of Levick Weekly, Candi Wolff, EVP Global Government Affairs at Citi, suggests that the image of banks it tied to the economy and because people believe that banks caused the recession, they will forgive and forget when things improve. “As the economy improves, I think you’ll see an automatic rise in confidence or at least support for banks,” she states. Citi appears to be keeping its head down and focusing on basics. A couple of years ago, it was among the first financial institutions to begin blogging in order to communicate directly with constituents, so it gets the CSR thing, but, for now, is content to play defense. Perhaps the new CEO will change that.
So who is right? I don’t think there is much choice to for banks to play defense and, frankly, pray. Van Praag calls for “structural, operational, and cultural change,” but other than what is mandated by Dodd-Frank and other regulation, change will be slow. Banks simply don’t know when and where the next crisis will hit. How can one realistically take on the skeptics in the media if one doesn’t know what self-inflicted problem is lurking around the corner?