Putting it bluntly, that would make it less easy to get rich quick irrespective of the quality of business transacted or the compliance culture in their part of the firm. This points to revisiting the terms and scope of the existing codes on remuneration of the G20 Financial Stability Board, the European Union and, in the United Kingdom, the Financial Services Authority. Industry structure and system resilience Incentives will also be influenced by measures that constrain the structure of banking. The UK’s plans to ring-fence banks’ more basic retail banking business will do more than help to make complex banks resolvable. The domestic-intermediation part of banks’ activities will effectively be separate from the entrepôt, wholesale business centred in the City of London. This will make it somewhat easier to see what is going on – where profits are coming from; how much capital is allocated to domestic intermediation, etc. It will also help establish different cultures in different lines of business. Within domestic commercial banking, we need somehow to unwind some of what I think of as the industrialisation of retail and business banking that occurred during the years of plenty. Branch and regional banking came too close to being seen as an exercise in sales and marketing. The role of local branch managers in making loans has been diluted over recent decades, replaced by credit-scoring techniques operated from the centre. Banking is about credit judgments. Boards need to think about how to re-inject that into the role of banks’ front line managers.
Bank of France reports industrial activity increased in all sectors in December 1996 BANK OF FRANCE, MONTHLY BUSINESS SURVEY, December 1996. In December, according to the business leaders surveyed by the Banque de France, industrial activity increased in all sectors, except in the intermediate goods sector, where it remained stable. The food processing and consumer goods sectors were the most buoyant. The capacity utilization rate remained virtually unchanged. Overall demand firmed on both the domestic market and the export market, where the strongest flow of orders continued to come from the United States and Asia. The competitiveness of French products was bolstered by the recovery of currencies that had weakened earlier, including the United States dollar, sterling and the Italian lira. Order books approached normal levels in all sectors, except in the intermediate goods sector, where they remained too low. Inventories decreased with the end of the lorry drivers’ strike, and now appear to be normal in the capital goods and automobile sectors. In the coming months, most sectors are expected to continue to show moderate growth. Commodity prices as a whole showed practically no change. Finished product prices held up overall, despite the continuing high level of competition. Investment programmes were limited to renewing obsolete equipment or to meeting the desire to increase firms’ productivity in an intensely competitive international environment. There were few plans for output capacity increases and in all cases were dependent on stronger growth in demand.