 Felly, ydych chi'n gallu'n gweithio. Yma, yma yw'r parenthion yn ddechrau i fynd i'ch cynnig. Mae'r hynny'n eu sydd yn ei ddweud, ac'r cyffredin hwn yn eich ddweud yma ymddangos. Maen nhw'n cael ei wneud hynny'n meddwl i fynd i'r cyfrifysgau yma, ond ydych chi'n gallu'n meddwl i'ch cynnig oherwyddâm. is of course there is not just a problem of trust in finance these days the Edelman barometer prepared for this conference showed that trust in many governments has fallen recently. But banks and other financial firms including insurers and asset managers can't draw much consolation from that many of them remain on the naughty step as far as the public are concerned more so probably in Europe and the US than in developed markets. Ac mae'n dweud y gallwn i'r cyflawnio ar gyfer. Yn y U.K., mae yw'r problemau yma yn 2013. Mae'r cyflawni'r cyflawni yn banc. Mae'r cyflawni'r cyflawni gael, mae'n rhaid i 73% o'r cyfeirio yma yw'r cyflawni'r cyflawni'r cyfflawni. 82% oedd yn ddweud i'r cyflawni'r cyflawni. Yn ym 4% o'r cyflawni, dwi'n ddweud i'r cyflawni'r cyfflawni yn banc, mae'n mynd i ffyrdd i'r cyflodol a'r nethigol. Yn 13% oedd yn ddweud i'r cyfflawni yma o'u cyflawni'r cyfflawni yn banc ANG i ddweud yn gyfer. Mae'n amddangosaint биol o'r cyfflawni yn ddweud. Yn 2013, yma ein bach bach yn ennill o'r cyflawni'r cyfflawni'r cyflawni. Mae'n adnod mewn mynd cwysylltu yn ddweud ond y peth. Mae'r cyffredin, 60% o bwysig yn ddigonol y banyddio'r cyffredin yn fawr, sy'n gwybod y bydd yn hoffa'r rhagleniaeth, i ddweud o'r rhagleniaeth o'r pethau'r gael. Felly, yn y Cymru, dyn ni'n rhaid o'r rhaid o'r rhagleniaeth arall, yn 2008, pe ffyrdd iawn i'r creu'r rhagleniaeth. I'r rhagleniaeth er mwyn yn ddiwedd, yn llawer o'i gael, yn gallu'r rhagleniaeth, yn y llyfridd ychwanedau, ac yn y cyfrifeth yn dweud o'r rhagleniaeth, Ond rhaid i'r mynd i'n meddwl, sy'n ei ffordd i'r wneud i'r relasiad yng Nghymru, i'r cyfnodd a'r bydau. Rwy'n meddwl i'r ffordd am gyfnodd. Ond rwy'n meddwl i'n meddwl i'r bydau am y problemu, mae'r rhaid i'r wych yn ei rhan o'r ffordd? A ydych yn gweld yr ysgrifffyr? Wrth gwrs, wedi'u cyfnodd o'r wneud i'r ffordd i'r gwahau. Ond yn rhoi'r argoffi a'r gwahau? Or, oherwydd ymgyrchu ar gael o'r syniadau ar gyfnod o'r syniadau ar gyfer y syniadau, os ymgyrch yn trefnol yr oedd ymgyrch yn gweld. A oedd ymgyrch ar y cerddur honno ym mhelyn o'r fforddau, mae'r gyfnod yn ymgyrch yn rwyf... ymgyrch yn rwyf yn ymgyrch yn yr ymgyrch yn yr ymgyrch. Mae'r gyfnod, Jang Jang Chang, y cael ymgyrch yn ICBC, y gallwn ar y gweld gwirionedd yma, ac mae'r cerddur o'r llanel anul. We have Guillermo Ortiz, the chairman of Banorte, a former governor of the central bank of Mexico, a job he held for so long that many thought he'd held it since the 1919 revolution. Urs Roener, the chairman of Credit Suisse, one of the survivors of the crisis but of course affected in Switzerland by public hostility to investment banks generally. David Rubenstein, not a banker as he was hastened to tell us, the co-founder and co-CEO of Carlisle Group and Lord Adair Turner who has a murky past at Merrill Lynch and Standard Chartered but then was chairman of the financial services authority, the UK regulator until it was dismembered in April of last year. And now at George Soros's Institute of New Economic Thinking, thinking deep thoughts about economics and markets. Also I should note Archie Cox as our rapporteur who will be reporting back to the forum on how well we behave and how close we get to answering the question. The way I propose to proceed is to give the participants a first round of fairly open questions in alphabetical order. I hope that they will be brief in their response, a maximum of five minutes and then we will open it out to comments and questions from the floor and finally give them a chance to produce closing observations or just to say sorry. We'll begin with Zhang Qing and perhaps I could ask you Chairman Zhang. Do you think this problem of trust in financial firms and markets is as evident in China as it is in the West? Is this something that you feel is a problem for your institution? Banking sector has always been respected. Over several hundred years it has been the case. I think in this century in the first ten years we had a crisis impacted on politics, society and business as well as the bankings sector. Many banks went bust. Another side of the impact is on the trust in banks. China is no exception. The world is an open one. Banks exchange information, any scandal is quickly known and therefore given the crisis trust in banks in their companies. There is no compliance and in bankers it is shaken. I think in China it is the same. It is a process of social and democratic development. I think this will continue to be an issue but we are a trustee in that sense. We as a bank we have been entrusted with a heavy responsibility therefore people including these of you here you have entrusted us with your future and lives of your families and therefore we need a higher standard of ethics. What changes do you think have been made in China since the crisis that give you a feeling that the banking system is getting better or do you not see a positive trend? To be frank the financial sector is improving itself compared with the past. There is more emphasis on risk management. This is a lesson learned and also there is more focus on compliance because people know that many banks have been affected because of lack of compliance. There is now more focus on rights of the consumers. This is also an increased awareness of rights and protection of rights of consumers but also in terms of environmental considerations, social responsibilities. These are all more in focus now so as a sector we are improving having said that one have to say that we are still falling short of the expectations of us. Giemer, let me move on to you. How far do you think that this is a western preoccupation with trust? Is this something from your perch in Mexico City that looks the same as it does in London or in New York? Let me mention not just Mexico but all emerging markets that had a financial crisis in the 90s and then the first decade of this century starting with Mexico, the Asian crisis, Turkey, Brazil, you name it. None of these countries had a domestic financial dislocation as a consequence of the global crisis. This is pretty remarkable. So this whole problem of loss of confidence and trust in the financial industry is not one that is present in general in the emerging markets here. Of course during our crisis, and I'll take the Mexican crisis, the Mexican crisis destroyed the banking system. It took about 10 years to rebuild and it took more than 10 years to rebuild confidence in the system. If you look at, you cited some numbers, some survey numbers at the beginning of your talk about perceptions in the UK. I saw a survey of Latin barometer which is a Latin American general survey on a number of issues. The confidence in the banking sector, they have never been high. It's not that bankers were ever popular in that part of the world or in many other parts of the world, but there has not been any noticeable slip in confidence in the banking sector in Latin America. What about confidence in regulators and central banks where they're the same or where they're different as overseers of the financial sector? Do you think that that has been damaged by the crisis and does that apply to Mexico and developing countries as well? I think that the best thing that regulators and central bankers when I'm here talking about the developed world can do to help restore confidence in the system is to finish with the reform agenda. I think that they have, I mean, we have heard a number of reports of advances in the reform agenda and I'm not going to go into that and that that is very true, but there's still a number of pending issues that unfortunately, I mean, given the nature of these issues, particularly, you know, the question of bank resolution, cross border, too big to fail and so on, probably take years. So this will drag on. I'm afraid for quite some time and the other aspect that it's something that Alex Weber was mentioning this morning is that you have these legacy issues that keep coming up, you know, every other week about litigation, about settlements, about, you know, or committed prior to the crisis, but they seem very real today and they seem, you know, like every day, like nothing is changing and that's a perception. It's probably a wrong perception. So I think that something that can constructively be done is to certainly improve the dialogue between the industry and the regulators and the central bankers. I think the initial sort of lobbying by the industry and pushing back on the reforms was not very successful. So maybe a change of tone and a change of attitude and particularly a change of communication, but also very importantly a change in behavior is fundamental to help restore this confidence. Thank you. Urs, from a Credit Suisse perspective and given the politics in popular reaction in Switzerland to failures, I'm sure you wouldn't deny that there's been a problem of trust, but would you like to try to talk us through the different types of constituencies of trust, if you like, in the financial sector? I think different things apply to clients versus the population and how you see the way in which the regulatory agenda has evolved in order to deal with these problems. Yes. I think that's a good starting point. I think you see literally, I would say, bifocational, almost trifocational issues. I mean, you talk about trust. When you talk about trust with clients, I would say that you probably see that on an individual basis you see it very differently. I mean, you've had banks that had seen huge losses of clients, clients funds. We had, during the crisis in 2008, I would say net new asset inflows of more than 200 billion over five years period, which is probably the largest of any bank anywhere. We have seen huge inflows during the crisis, also in our wholesale prime brokerage business. So, on an individual basis, I would say the trust with clients, and we have a lot of, obviously, discussions with clients, has come back in some instance, I would say, didn't probably not go away despite criticism about behaviour. But that's only one element of it. And then I would say the second area is conduct, and I'm sure we'll talk about conduct a little bit later anyway, so I will not deal with that. And the third point is, I would say, the issue with the public at large. And that obviously is heavily influenced by a number of things. I would say, first of all, the fact that probably the great moderation may have worked for a decade or so, but has not, in the end, has not worked as we have all seen. A lot of people have lost a lot of money. But what added to that was not just the disappointment, but also the anger that you had seen banks being bailed out by governments. And that obviously then triggered this entire discussion about too big to fail, the discussion about how can you make sure you have a system that is stable enough, even in a crisis, that will allow even large banks to fail and actually be taken out of the system. Without actually blowing up the entire system. I think, at that front, a lot has happened. And probably more has happened than a lot of the people are prepared to accept. I would say the issue of bailing, while it is not on a cross-border basis, I would say universally adopted, I would say there are countries where you could say they have now a system in place where basically the too big to fail issue is resolved. I mean the US would argue, and Paul Tucker is a good witness for that, would say well basically, as far as the US is concerned, I think they have a system now in place including bailing that would allow failing banks to take out of the system. The UK would probably argue the same way or along the same way. Maybe in Switzerland we have started to deal with the issue relatively early on, implemented it very fast and I would also argue we have a system now in place that works. What does not work yet is that apart from the differences you would see globally, there is not yet a totally aligned system that would allow global syffies to be taken out because there is no harmonisation of all the rules and unilateral treatment and respective acceptance and acknowledgement of acts taken by a home regulator versus a host regulator and the like. That's an issue that still needs to be resolved. It's high up on the agenda of the GFSB and I would argue probably also of the G20 but that's the ultimate litmus test for system stability as far as I'm concerned. That is something which is a prerequisite for rebuilding trust. People have to be convinced that in the future there may be banks that fail but if banks fail they will have to be taken out of the system and bankruptcy can occur as it would occur. In every other sector as well without governments having to come in and bail them out. I think that's an integral part and that is not yet, as I would say, fully resolved. Could I ask you to comment also on the point that Guillermo made, which I think is an important one, that there continue to be episodes, Libor obviously one, we now have the discussion of foreign exchange potential benchmark manipulation there. Do you think we're going to continue to see these issues? Some of them arguably nothing much to do with the financial crisis actually. You could be manipulating benchmarks at good times as well as bad. But this nonetheless creates a continuing drip of bad news which does affect trust of the system. Do you think we can expect to see more and more of that? I would say Guillermo in his analysis was actually not surprising. It was spot on. The trouble is if you have an industry and I would take it wider than just the banking system, just finance generally. If you are on the spotlight by the media or the public at large, every little incident basically kicks you back into the bad spot irrespective as to how much progress you have made in the interim. It's clear if there is a particular focus, obviously the scrutiny which you look into issues is even higher and there's no excuse possible for things that have come to light like Libor and possibly other things. That basically before you have resolved those issues and gone through them, I think it will be very, very difficult to fully restore trust in the system. One should not forget however that this is not just something which represents the banking sector as a whole, but it's something which are things that happened in the past that have to be worked up and have to be resolved. And this will take time. It will be difficult to create that trust that ultimately the sector desperately needs to be fully functioning in my opinion. And therefore I think it's a prerequisite that you get through these issues as industry-wide issues to the extent they are and on an individual basis to the extent that banks are at fault to put them behind you so that you can move on. But every additional incident that comes up, no matter how small it is, is in a way a step back towards creating that trust. So more trouble to come. David, you're not a banker, perhaps never wanted to be, but from your perspective Carlisle, obviously a huge financial institution of a different kind, do you think we're talking about a banking problem or do you feel in your business that there has also been a failure of trust or a collapse of trust in the financial system more broadly? Well generally I think we should make it clear that in good times and bad times people are not marching in the streets saying I love my bankers, I love my private equity investors because people generally don't do that type of thing. We're never going to be a situation where there's great popularity for banks because that has never been the case. Occasionally it gets worse than it is normally because when you go through situations of the type we've done you get a lot of headlines and banks have lost money and governments have to come in and provide some support and that's not popular. But we have to remember that we're dealing with a situation where we're not going to find people saying well my banks are as popular to me as Apple is or Starbucks is or people who produce products that people can touch and feel. Most people's relationships with banks are that they're probably paying more bank, more fees or money to banks and they're getting back from them because they're probably borrowing money or paying various fees and so probably banks are never going to be universally popular. I do think that most recent situation exacerbated a bit in part because regulators were very concerned that the banks could fail and if they fail maybe that would mean that customers money would be lost. It turns out that didn't really happen through this crisis. Customers money was more or less protected certainly in the United States but there was a concern that could conceivably happen. As the private equity, private equity did not get bail out money from the U.S. government. We don't really have government money that's insured the way FDIC insures money for banks so we're not quite in the situation where the public would feel that we had the same kind of relationship with them that banks might have. So I think private equity is not probably as unpopular as the banks became. I think private equity firms generally are not beloved by some people who don't invest with them. People that invest with them tend to like them because the returns have been very good. I think we can do a better job throughout the financial service industry of explaining what we actually do to justify the fees or the compensation or the way that business runs. But we have a hard time explaining to the average person in the public what we actually do to earn these kind of compensation levels. We should do a better job at it. But generally I think the worst is probably behind us for a few years or so. I think the public is now focused on more other things. I think in the United States we passed Dodd Franks. The Volcker Rule regulations are now out. I think by and large they will be probably implemented. There will be some adjustments here and there. I think we're now on to other things. I think it's probably a good thing. I think the banks now have cleaned up their balance sheets. I think the other financial service firms have done a better job of explaining what they do. And I think in the future when there are future problems like the type we have or if there are we've got to be have more transparency as the problems are going through. But nobody should think that all of a sudden people are going to jump up and down and say I love my banks. I love bankers. Now with one exception I would say it is an interesting phenomenon that when you ask members of the public in the United States do you like the Congress. Well the Congress has a popularity rating of about six or seven or eight or nine or 10 percent. Do you like your congressman. They like 99 percent like their own Congress. That's why 95 percent of them get reelected. The same is probably true with one's banks and bankers. Probably people say I like my bank and probably 90 percent of the people like their own bank. But do they like bankers generally. No probably 10 or 11 percent. So it's the same phenomenon as congressmen. They don't like the industry generally or they don't like Congress generally but they do like probably their own bank or their own congressman. The Financial Stability Board recently invented an exciting new acronym the NBNI SIFI which is I believe the non bank non insurance systemically important financial institution. Do you think we need such a category and are you bidding to be in it. Well it would be an honor to think that one is significant enough to be in that category but everything else being equal I would prefer to avoid being in. There's no doubt that some financial institutions have become larger than they were before private equity firms were historically very very modest organizations. Now some of the largest manage 150 to 200 billion dollars. That's a large in this context. But again the private equity firms that we're talking about are really not systemically important in the overall scheme of things in my view. I don't think that if a private equity firm did poorly all of a sudden the financial system would collapse. I think banks are in a different situation so I think we should look very carefully at whether we're going to overly regulate some parts of the financial service system that we don't really need to regulate regulation is a necessary evil but we don't need to over regulate and historically when we've had these crises we have over regulated and the result of that has been not that we've solved the ability of governments to avoid future crises but we probably constrained business to do the kind of things they probably should be able to do. So I would say that generally I prefer to avoid the honor of being in one of those those institutions. Thank you. Well perhaps the FSB will hear this. Well finally we get to a former regulator turned quasi academic. So it's very much a case of last and least. The it's is it a question of behaviors in banks that got into this mess or should we also think about the way in which we have thought about financial markets if you like efficient markets hypotheses rational expectations models which it's argued did create a mindset in which regulators and others were inclined to say well look hey if the market says that this peculiar instrument is worth this price then who are we to question and led to a kind of reverence for for markets if you like which which perhaps caused us to be too indulgent towards them in the past. Is that a thesis that you would share and if so how are we getting out of it or have we got the beginnings of any new model which would allow us to achieve a better equilibrium if you like between markets and regulation. I think it's a very good question and I think the fundamental answer is yes. I mean I think if we go back to why has trust been lost in banking in particular financial services more generally it is partly conduct issues and those include both the extremes of fraudulent dishonest conduct like the libel fixing which is a shark and it produces lurid headlines you know highly paid people cheaping cheating the libel system and then sending emails to each other saying come over and we'll have a bottle of Bollinger and we'll celebrate you know this little trick more generally for retail customers a feeling in some countries that highly commission oriented sales people were selling in products that they didn't really need like in the UK payment protection insurance and more generally even at the wholesale level stuff which has come out about people selling to pension funds or insurance companies securities whose value they doubted to investors whose intelligence they disparaged so all of that has had a major effect but let's be clear I think the biggest thing that is blown trust in the banking system is that there was a financial crisis and that that financial crisis produced a huge setback to people's prosperity people lost their jobs they lost value in their house and this is a problem because it came after a period of very significant and overt and public confidence that we'd solved all the problems and that the financial system was helping to make the world a more efficient and a safer place so the fact is that if eight years ago we probably wouldn't have had a discussion eight years ago here of whether compensation in the financial system was too high but if such a question had been answered at that time I think that the bankers would have been able to say well that's an absurd question we're doing some very very complicated things you know this this trading is very complicated but it's making the world a more efficient system our risk management that's really very clever it has to be very clever because we've got a complicated system out there that costs a lot of money the defence would have been yes we're being high paid for some very sophisticated things which are making the world system both safer and more efficient and 2008 was the crash of that proposition and the crash of that proposition is a problem not only for the industry but also for the official sector for regulators central banks the IMF and for academic economics the fact is that as Howard has suggested officialdom largely went along with the proposition that the more innovation we had the more structuring the more derivatives the more that we would distribute risk into the hands of those best place to deal with it we put forward the idea that more liquidity had with trading the better price discovery the more efficient the system would be it's quite interesting to look at the IMF's global financial stability report from April 2006 it has a wonderful quote and it goes roughly as follows it is increasingly recognised that the distribution of credit off bank balance sheets into the hands of those better place to bear it has increased the resilience of the financial system and here's the great phrase this resilience and remember this is April 2006 for 15 months before the onset of the worst financial crisis this resilience may be seen in a lower probability of commercial bank failure so we got it wrong and sitting behind the official sector getting it wrong I think there was a set of academic theories that got it wrong we fell over in love with the idea of efficient markets that markets were all efficient that they priced things in a rational way and we did that despite looking at the history of crashes and panics and manias which told us that that wasn't true we fell in love with the rational expectations hypothesis and the mathematical way of a modelling economics which failed to realise the importance of behavioural and reflexive and self reinforcing effects and I have to say central bankers in their monetary theory and in particular their monetary models fell in love with a bizarre proposition which is that the financial system wasn't very important I mean broadly speaking most monetary models in central banks didn't have a financial sector there the idea was that the financial sector was like the car manufacturing sector it might be doing useful things but it didn't have a macroeconomic importance it was described by a lot of theory as being a veil through which the monetary stimulus occurred but it had no particular consequences and I think the fundamental problem of all of this was that we developed a thesis that we could treat financial markets and services like other markets and industries and I think the fundamental point about recovering trust both in the area of conduct and in the area of macro stability is to start by recognising that financial markets and services are very very different they're very different in their customer relationships for the simple reason that particularly at the retail level the retail customer has almost no ability to test drive financial services, asset management services etc and see whether they like them they are not empowered there is an asymmetry of information and capability and that creates a duty of trust on behalf of a financial services industry which doesn't apply elsewhere but it's not also in the area of macroeconomics we cannot treat financial services as just markets like any other the absolute essence of what we have got to grip in economics is why do financial systems introduce extreme instability into the market economy and I think we are beginning to get some ideas of that Howard but I think this is very early days of developing some much more effective economics than that which dominated before the crisis Thank you. I'm going to open it up to the hall now but just let me ask one question. Guillermo you are a central banker through this. Do you recognise this intellectual prisoner that you were of these theories? Well let me just add to what Adair said he was quoting this passage from the IMF financial stability report just a few months before the crisis and let me remember in our discussions in Baal and this was a place where central bankers would gather and would speak freely and part of the reason why the sort of financial sector was left out of this modeling exercises in most central banks analysis was the belief that the financial institutions had developed such sophisticated models of risk management that it was almost impossible for regulators to improve on them and this notion of light touch regulation and the notion that financial institutions would not only allocate resources from savers to the most productive users but that more importantly they could manage risk well was pretty pervasive and I think that that is absolutely true. I mean if you look at the statements of some very prominent central bankers you know as early or as late as 97 2007 sorry 2007 the probability of a systemic problem was very much minimized so I'm just expanding a little bit on what that is. While we did have a financial crisis that was significant more significant than we've had quite a while we are not going to repeal the business cycle for a while there was talk in the United States that we now had such sophisticated models at the Fed that we could effectively repeal the business cycle we could modulate our way out of having recessions that proved not to be the case and I don't think we now really feel that we can get rid of these kind of business cycles. And so we're going to have a crisis or a recession or something of this type again in the future and we shouldn't think that we have figured out through Dodd Franks or anything else how we're going to eliminate this type of possibility. But this was no ordinary business cycle but we'll have things like this in the future. I'm sure but I was looking the other day at a paper published by the Dallas Fed just six months ago and they were estimating that the cost in the United States of the crisis in terms of output for gun is between 40 and 80 percent of 2007 GDP to the states. So I mean this is this numbers are just massive. We're not going to repeal the business system but I think we would be a business cycle but I think we should be aiming to make sure we don't do 2008 again. I mean broadly speaking there are two of these in the history of advanced capitalism and they're this one and they're 1929 to 33 and we're not going to get rid of the normal business cycle. But I think we ought to be aiming to get rid of cycles like this. We can do better than we did in protecting people against what happened before and maybe enhancing protection that some people would like. But I don't think we should feel that we are so smart that we're now going to figure out how to plug every potential problem in the system because every time in the past as Ken Rogoff pointed out in his book when people figured out that they've had a problem and they're going to try to plug it next time and fix it. They have missed what was the next problem. So there will be something in the cycle next time. We won't really anticipate. We don't know how great it will be. Part of what happened this time was exactly what happened in the 1920s. It was an expansion of credit very similar to 1920s. Well the interesting thing is about the banking system. It isn't that we create new mistakes. We just keep repeating the same mistake. I mean pretty much the iron law of banking is that somewhere in the world every 15 years we have a massive commercial real estate. But they didn't have the type of mortgages in the 20s that we had now. What we were doing was giving mortgages to people who really didn't deserve them probably by normal standards. And that probably wasn't the case in the 20s I think. The other difference also was that the interconnectiveness of the system was huge and that wasn't probably not the case in 1929. As you have observed just as the regulators lost control of the financial system in 2007 I have lost control of this panel. But we will try to regain control just as the regulators have. And let's take one or two points from the floor down the front if you could give your name and designation and the number of your bank account. I think of the first two. Alex Edmonds from Wharton and the London Business School. So Howard mentioned at the start the public's mistrust with incentives. So what's your guys' view as to the role that incentives played in the crisis? So one view just to caricature it is the incentives were completely wrong. The bankers knew they were taking bad decisions to maximise risk for the short term but they did this because they had short term incentives. Institutional investors knew this as well because they were only caring about holding their shares for the short term. But the other view is that that actually wasn't incentives like Lehman Brothers had perhaps closest to the compensation model that people advocate. Employees owning stock in their own firm and it was instead as Lord Turner was suggesting bad models so those were bad mistakes in the end but these were not deliberate mistakes. So where do you stand on the spectrum and what does this mean for your views as to how to change governance and compensation to solve this trust issue going forward. And in particular if you think it's sort of bad model, nobody has the right model, academics, practitioners, regulators don't have the right model. How are we going to stop a new crisis from happening as David was intimating? Thanks. I'm going to be quite disciplined because if we have one question and five answers that won't really work I'm going to ask Urs and then Adair quickly to comment on that. Ok well on the first one I think to have models and to have good risk models is something which we should not just now throw overboard and say well no this hasn't worked in 2008 now we don't want to have risk models anymore. I think that we work I think the whole industry including with regulators we work very hard on developing and having proper risk models. I think that's a prerequisiter for functioning global financial market as far as I'm concerned. As it relates to your compensation or incentive issue I think there's common wisdom that you have to set the right incentives for people. Now you can have an argument as to whether this was the case before 2008 and you would find incidents where this was the case that perhaps incentives were not properly structured. I think in this area a lot has happened since the crisis. If there is one area where I think universally globally you have seen a huge development it's in the area of compensation and incentive steering. We have learned a lot more I mean longer deferrals and so forth but as you rightly pointed out in Lehman in the case of Lehman that was not the problem. I mean most of the senior people at Lehman had their entire wealth stuck in the firm by way of being shareholders of the firm. So there was no reason to actually assume that they would have to it was basically a problem of the incentive. I think incentives may have co-contributed to the whole thing in certain areas. There's no question about in certain in certain businesses but I don't think it would singly that as the primary factor for the crisis. Well broadly speaking I agree. I think I think it played a role. It was crazy to be paying people large cash bonuses at the end of the year before you'd really worked out whether what they'd done was sensible. Or had left a toxic trail and I think it's good that we put in place the many reforms that we've made but it's less important than other things. Do I think that there were a whole load of bankers with Dick Fould, Fred Goodwin sitting there in 2006 saying oh this is OK. I've got to put option on to the taxpayer so I'll just ride this thing for as long as possible. No on the whole what they were saying is I'm a really really clever person. I am involved in a wave of innovation which is making the world a better place. I mean that was their thinking. They were brought it. They were caught up in the same this time it's different hype. They weren't cynical. They were deluded. And so the fixing the incentives is important. We have to do it but it's not as important as the development has much more powerful levers to lean against the inherent nature of the credit and asset price cycle. That's the crucial bit of the economic models so I think we have to get right. Thanks. Thanks. Yeah. Back there. Can you get a microphone. Thanks very much sir. This is a very. So can we have your name and my name is Rana Kapoor. I've. Privileged enough to have established a bank called Yes Bank. In a very turbulent times through the global crisis through the eurozone crisis and a very protracted Indian crisis which is still going on. And I'm very happy to report to you. I have confidence. I have conviction. And I think also very effective communication believing that a business of banking is a public trust business. My question sir is that we discuss the vagaries of the past. We discuss the new elements of regulations in the future. But the incidence of risk in banking whichever part at least in my assessment is reputational risk beyond credit risk beyond structural risk is really reputational risk. How do you build brand equity which creates a trust mark which creates immense confidence of the public to really believe in banking all over again. And it's got tainted because of past reasons. But it can be built with super confidence if the regulators start taking it a little easier. So my question is how do you really take care of the most important risk which is reputational risk. Thank you. Sorry to come back to you. But I guess I mean it's not that as I said at the start Credit Suisse was not one of the worst. But nonetheless you were affected by the broad reputation of investment banking. How do you think about reputation risk in your bank reputation risk has always played a significant role. I mean I start from the premise that actually trust of the clients and society at large is the fundament of the foundation of what banking is all about. And I think what has been lost or had been lost in the past a little bit was the idea that you know this is truly a service industry and you have fiduciary trust relationship with your clients and you have to do what is best for your clients. And that everything that you do that undermines that notion actually goes against your reputation and if it goes against your reputation it is detrimental in the end also to your economic success. So it plays a very significant role. We have high standards. We actually measure our people against it is a significant part of the assessment of performance of our people of our senior people as well. And in my opinion it's one of the fundamentals to actually run a bank successfully long term. Chairman Jang you are building a reputation internationally of course ICBC has a big reputation in China already but as you enter new markets which you have been doing on quite a sizeable scale. How do you think about building a reputation for your bank. I have listened very carefully for the discussion and I would like to expand my answers. I think that the reason of the crisis caused by stakeholders and I think that some stakeholders takes the main responsibility for instance the regulators and the bankers. So in order to prevent the risk and I think that we could do four things to re-establish our reputation. Firstly we should re-establish our regulations because the creative activity on the one side and the regulation on the other. But regulation should not go ahead of the and then so we should create creation. So we should we have a saying in China that if we lost some sheep the sheep coming out of the cages and we should first find the holes and mend the holes. And for instance now we have a Basel III and the regulations such as this such as a Basel III should be established as soon as possible. Secondly we should re-establish the target and for instance commercial banks and the investment banks they have a problem that they said the target is too high. So short term they are they are they are pursuing the short term interest. So well now with the regulation with the tighter regulation we should set the target a little lower and in this way we could have obtained a sustained inability in the long run. And so thirdly we should re-establish the trust because the banks are the trustees and from the middle ages there was only one bench with a bench with a banker sitting on it. And if the money was not paid and the bench will be held by the clients and hit the bankers. So now it's actually the same thing and I think that there is an invisible asset for our bankers that's the trust and that's very important. So the thirdly we should go back to our tradition and now we have seen the modernisation of the banks and some banks are forgetting their basics and their originals. And so what are their basics apart from all these financial derivatives, the variety of complexity, the products and the people get lost in their basic services. And some banks actually they are pulling their hair trying to get out of this planet. And I think that we should go back to our traditions and only in this way we could re-establish our trust. And well I wouldn't use the word of reasins and we should restart re-establish our trust. Thank you. Thank you. Well back to the future is the motto there perhaps. Let me take, yes at the front here. Thank you. I know who you are but not anybody does. Katinka Barysh from Allianz. When we have a crisis in politics we might fiddle with the electoral system and increase the supervision of party finances. But most importantly we call for more honest and better political leaders. Perhaps a question to Urs Röhrner and Adaird Hörner. Do you see a role for the bankers themselves in overcoming that crisis of trust that we still have? Thank you. Urs, well it's been directed at you. Would we be better if an honest man led Credit Suisse. I'm just paraphrasing. I think I got the idea. I would say it's probably one of the deeper prerequisite. I think what you have to do is basically you have to, first of all you have to define the values of what your organisation stands for and then you have to live them. You have to live by example. If you don't do that then you have to take the consequences. There's no question about that in my mind. Otherwise you will not be able to fix it. I mean let's not forget what ultimately banks are. Banks are the amount of capital, actually sizeable amount of capital now as a result of the changes of the regulation. Funding credit and a lot, a lot of trust by everybody, all the market participants, clients, people, other banks and so forth that actually you will honour your commitments. That you have to make sure and you have to live that and you have to live that by example and you have to make sure that you do this in a credible fashion. Credibility is probably one of the most important assets that you can have. Not just if you are the chairman or the CEO of a bank but across the bench if you are a managing bank. Actually it's probably not only true for banks if I may say so. David, I'd say about 30 years ago or so we began to deify business leaders and began to publicise them to a greater extent than before. I would say 30 years ago or longer ago bankers were more or less faceless and very few people could name the chairman or CEO of most banks. Today because of the proliferation of media, because of the crises we've had and because of all kinds of new services, internet services, blogging, so where everybody seems to know the name of the CEO of every major bank and as a result they have a greater obligation and so do people in private equity to deal with the issues of reputation. They have to stand up and be the symbol of their organisation because the organisation itself can't move and people can't get their minds around what an organisation does as much as what the CEO or chairman are doing. So the CEO and chairman have to be much more public, much more transparent, they have to be a role model. I think some of them have done a very good job of that, some have not done as good a job of that. I think most of them now recognise that in the future they've got to be more public than they were, more transparent and more understanding of the concerns of the average public and citizen than probably they did 20 years ago or even 10 years ago. Thank you. I'm going to take one more, just about got time I think. Yes, here, third row. My name is Jeroen Daisblwm, I'm the Dutch Finance Minister and presently also the President of Eurogroup. I'd like to pick up on that last point of the role of bankers because I was struck today in a couple of sessions by the openness in which some of you are bankers and regulators now talk about the problems that we've had and how we're dealing with them. I find in my practice that I as a politician have to talk to the public and to the parliament and to media about what we're doing regarding the banks. And I'm not being helped very much by bankers, I'm being quite frank. So what I'd like to ask you is to have the same frankness and openness that you have here today in this more or less private setting outside and talk to the public and tell them what you're doing and also reflect on what's happened. I'm not asking you to apologise, not at all, but make the analysis in all openness and frankness and talk to the public about what you're doing. And my second point would be we're all trying to work out how to not have another crisis. We're probably getting things wrong and over-regulating and doing the wrong things and this is probably all true. But it would certainly help if when we take steps forward the financial sector would not respond so defensively or negatively but also say sometimes these politicians are probably doing the right things and the regulators are probably right in imposing some more strict rules and regulations. That would also be a signal that you understand where it comes from. So thank you very much for your openness and directness today and hope to hear much more from it. Thank you. Aded, did you feel when you were a regulator until quite recently that the financial system was still too defensive and not prepared to come out and communicate in the way the minister asked? I certainly think that the industry in response to the re-regulation that was required that it still had a tendency towards a reflexive attitude was if we said the capital ratio should really be 10%, they'd say how about 10% minus 2. Whatever we said it was less and at any time that we said it there were always arguments of why you'll get in the way of lending to the real economy, we won't be able to raise the capital etc etc. There is a very strong tendency to as it were fall into a negotiating stance with the regulators and I think there was a failure on the behalf of the industry to realise that the public really didn't like that and correctly didn't like that and in the face of this enormous crisis of 2008 really wanted the industry to say we want to come over on to the same side as the regulators and the central banks and work out how radically we have to reform this to be a more stable system. I think that tendency which I think has diminished over time but certainly during the course of the debates about Basel III I can't actually remember any of the bankers whom I was dealing with saying you know you say it should be 10%, how about 12% funnily enough none of them went that way and it would probably have helped the debate if they had. So you're still part of the problem or are you becoming part of the solution? Let me maybe get some nuance to what the minister had suggested. It's still probably an initial reaction when in the wake of the crisis and the first I would say regulatory proposals came forward was somewhat defensive but I think that stance by the industry has changed very quickly and I can give you an example from my own country. I was a member of the expert commission that designed the debate to fail law. Now that was not an easy law and as you probably know the Swiss standards are among the highest in the world. I signed off on them. I can say that now it was a unilateral decision in the end as to how we designed the system because I was personally convinced it was the right thing to do and I've had many colleagues who have done that in similar fashion in industry bodies and the like but one should not just misperceive the fact if the industry organisations or individual bankers say well but this one we don't like because you think it doesn't make sense. I can give you another example. There's a clear tendency now towards balkanisation in the regulatory environment across the globe. I mean every country doing its own own scheme or its own own laws which we find as an industry is not what should happen because it undermines the various sense of global finance. Now as a banker you have to stand up and say don't do that. Get also your act together, align the regulatory system, harmonise it, have tough and clear rules. I'd rather have tough rules that are clear for everybody and are universally applied and I can tell you when I think back about Basel 3. At Basel 3 negotiations when you read these reports and the footnotes with all the little exceptions for every country as to buy when they have to do it those were not bankers that had introduced them. That was part of the overall regulatory setting process by governments. Sometimes because governments were responsible for certain banks that were a bit closer to the government than others and so forth. So I can give you hundreds of examples. I think when you take it on the face of it I think the general learning of the industry is something had to be done. What happened was good. Generally aligned regulation on a global and harmonised basis makes a lot of sense. Industry has also helped. We have introduced bail-in as a concept that came from the industry. It did come from regulators I would say. That's something that's the path on which we should go but doesn't mean that bankers should then simply sit here and say well no matter what is being proposed we are not allowed to say something if we think it doesn't make sense. Do you have the argument? Do you have a discussion about it? Maybe sometimes you are right and sometimes you are not right. We are out of time. I was just going to say self-flagilation is not a normal human instinct and bankers aren't going to flagulate themselves any more than regulators are. When regulators do something wrong they don't go in and say to the legislators we did something wrong and changed things the way we did it. They negotiate and they negotiate with legislators just the way bankers are negotiating sometimes with regulators. So I don't think it's fair to say that the bankers are always interested only in their own interest. They are interested in the public interest as well. They may have a different perception of it but think about the bankers. Bankers today are operating under the vocal rule. It took four years for the regulators in my country to figure out what that rule was. So how would you like to be a banker dealing with regulators who can't come up for four years with a rule? Now they've come up with it and it's a little complicated 800 pages or so but it's not always a one sided street where the regulators know exactly what the wisdom is and the bankers and business people don't. We are out of time and therefore not going to have another round nor am I going to do a ten minute summary. I think that it would be hard to summarize because I think there have been differences of opinion on the panel. That's always a good idea in my view but I think we would have to say a couple of things. One is that this problem is not fully solved partly because of the ancestry of the past and there are likely to be more issues emerging and they will require handling rather carefully. And secondly there remains an unfinished regulatory agenda both internationally and indeed in individual countries. But I would say that there was a sign here and indeed in some of the very interesting comments on the floor of a debate which is a sense of people all being on the same side of attempting to rebuild trust in the financial system. Well I think that that will require still further cooperation between politicians, regulators, bankers and indeed even NBN and ISFI. I'm sure you're going to be one in Carlisle. Thank you all for your contributions.