too big to think

Bank CEOs have a habit of turning into bank critics once they retire

October 7, 2013
October 7, 2013

Even for a straight-talking Dutchman, the recent remarks from outgoing ING chief executive Jan Hommen were remarkably frank. Hommen, who stepped down last week from the helm of the bailed-out bank, admitted to the Financial Times that the bank grew “too big to manage.”

The substance of his complaint isn’t all that surprising. After all, perhaps the most common criticism of big banks post-crisis is that they have become “too big to fail.” But those criticisms don’t usually come from the mouths of prominent ex-bank bosses. Granted, Hommen isn’t your typical ex-banker; he stepped into ING’s CEO post after it suffered during the 2008 financial crisis. Given that it was his first stint in banking, his outsider’s perspective may have helped him see the problems besetting banks. Previously, he served as CFO of global electronics group Philips and aluminum producer Alcoa, which are arguably just as complex, if not more so, than ING’s banking and insurance business. Even so, he has deemed the business of banking to be overly complex.

But even former bank executives who’ve spent a lifetime in finance have taken to tearing it down soon after leaving the industry.

The biggest about-face came from former Citigroup boss Sandy Weill. Weill is credited as one of the key players in the repeal of the Glass-Steagall Act, which opened the door for banking mega-mergers like the one that created Citigroup. Last year Weill said big banks should be broken up, with deposit-taking retail lenders shielded from racier investment banks. His partner in the Citigroup merger, John Reed, is similarly critical of what banks have become, going as far as to apologize for his role in building up the financial monolith.

David Komansky, former chief executive of Merrill Lynch, is contrite about his role in the successful campaign to repeal the Glass-Steagall Act: “I regret those activities and wish we hadn’t done that.” For his part, the former head of Morgan Stanley, Phil Purcell, says that banks should voluntarily slim down, given the low valuations market place on sprawling financial groups these days.

Despite the financial wreckage across the continent, Hommen seems to be the most prominent ex-bank boss in Europe to speak out in favor of smaller, simpler financial firms. His counterparts with longer experience in the region’s banking industry may not share his feelings, or perhaps it’s just taking them longer to find their voice.

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