The ethical conundrum facing the next generation of bankers

How up-and-coming bankers are digesting the financial crisis at universities and business schools. The fallout from the credit crunch has caused some deep soul-searching among the students at the Frankfurt School of Finance and Management. Their chosen profession has suddenly fallen into disrepute. Many have begun reviewing their career choices, thinking twice about going into the high-flying world of hedge-fund management, and considering a more low-key career in savings banks. What is more, for the first time, the students are analysing the banking profession from an ethical standpoint. Holger Trzeczak takes a look at the conundrum facing the next generation of bankers . _____________________________ These young banking students pay around five thousand euros a semester to study here. There are about 20 in the class and they all want to become managers. They have their eyes on stock prices just like other bankers. The students at the Frankfurt School of Finance and Management are fascinated by the financial world and its current crisis. Florian Keppler’s attitude toward the field is unperturbed. Crises are part of the economy, he says, just like in the rest of life: "Everything collapses at some point. If you are only familiar with the good times in business and everything just keeps getting better and developing well, then you are no longer able to judge the risks properly." The professor says: "There is a rescue package in Germany, but so far few banks have availed themselves of the credit on offer." In the class on decision theory, the professor likes to discuss issues from the current crisis. The young bankers think about their prospects in Germany: "It’s relative. Are other countries doing this too? Are we remaining competitive?" - "If banks in the United States and England are forced to take money, they will have more capital and be better equipped for later competition ." - "Personnel will move away from the banks in question, especially if limits are put on salaries in Germany. Bankers will start to orient themselves toward the Anglo-American banks, because of the money – I would, too." Florian Keppler says understanding how interest rates work is still the ABC of banking. Daily life goes on at the school. These future financial experts seem to take a sporting attitude to the crisis. They are studying harder than ever, and learning from the current problems. For instance Ayca Tunc, business student, she says: "We learn how to do accounting for financial instruments in difficult times when the markets simply no longer indicate their value. So new methods of financing are developed..." The reporter asks: "Accounting methods or accounting tricks?" – She answers: "Methods, new methods. Of course there are tricks. There are always tricks..." What about bonus payments? Florian says he’s not interested in the financial sector solely to earn money. He thinks it’s fascinating to make large fortunes grow. He says paying bonuses for success is justified: "The problem is: it has become a matter of course to pay a big bonus even if there was no success, or only partial success." The school teaches that it's important that the numbers don't take on a life of their own, and become divorced from real values. But Florian says bets on rising or falling interest values should not be forbidden: "I don’t know whether that would be so useful and worthwhile for the economy as a whole. Every bank is a business seeking to make a profit. We have to find intermediate ways to assure that it all works for the good of the whole." The school’s dean says the banks shouldn't only be there to make a profit. But they do have to survive. And that means they have to be innovative. Thomas Heimer, Dean, Frankfurt School of Finance and Management, means: "We have to teach our students to understand modern financial products. They are complex, just like products in the processing or automotive industry. We in the financial industry simply have to acknowledge that employees in the banks have to have more know-how, so that they are able to judge the dangers and risks of these products." The up-and-coming bankers in Frankfurt still have a positive attitude toward their future career. And as long as things continue to go halfway alright, that's unlikely to change.

DW-World | November 11, 2008

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