Future banking crisis 'is inevitable'
THE next banking crisis will be quite different to the current problems, says Sir John Peace, who joined the board of Standard Chartered Bank in 2007, becoming chairman two years later.
The bank was brought in to advise the Treasury during the banking crisis, making him a close observer.
Today, he is on first name terms with the Chancellor and the governor of the Bank of England, Sir Mervyn King.
Sir John readily acknowledges that there will be future banking crises.
"You are not going to solve a future crisis looking out of the rear view mirror," he said. "I promise you that the conditions that caused the last crisis will not be the conditions which cause the next. And the seeds for the next one are probably already in place.
"What happened in 2007 was a one-in-a-hundred years event. It is not going to happen frequently.
"There is still today a lot of criticism of banks and bankers, much of which you can argue is justified. But what we saw in 2007 was a systemic failure not just of banks but of central banks.
"Remember Northern Rock and how slow the central bank, the regulator and the Treasury were to deal with it? There has to be a macro-prudential policy put in place that sees these events unfold more quickly.
"We saw in 2007/8 that no country was immune, not even the US, from a crisis like this. A global perspective has to be taken to stop it happening in the future.
"It is important we look at the necessary tools and the mechanisms globally as well as nationally to make sure it doesn't happen again."
Sir John said much needed to be done by banks in the UK in their lending to small businesses.
"It is not just a question of money but it is helping and supporting them.
"It is more than just money – it is giving them the expertise and knowledge."
As a flavour, Sir John gives an example from what Standard Chartered is doing in some African countries.
"In many parts of Africa we provide financing for crops. Not only do we provide the money to buy the seeds, but we have a team of farmers in Johannesburg who will help other farmers choose the right crop.
"We will insure the crop for them, we will even help them provide a bunch of farmers with the equipment to harvest the crop.
"In Ghana, for instance, we are 2.5% of the GDP. We have made ourselves an integral part of the fabric of society and the community which we serve."