I explore culture change by analyzing two reports issued by two large US banks. Goldman Sachs released its Business Standards Committee Report in 2011 following a series of high-profile regulatory actions, lawsuits and negative media reporting on its activities related to the 2008 financial crisis. The report was followed up by progress report in 2013 on the implementation of its commitments. Similarly, JP Morgan Chase released its “How We Do Business” report in December 2014 following a number of challenges, including the London Whale trade that cost the firm at least $6.2bn in 2012.
Why focus on these two reports? Culture is a massive topic and a comprehensive analysis would entail looking into a company’s entire management and operations, which of course I cannot do. These reports reflect the banks’ commitments and the voice of management. An analysis of these reports will never replace a more in-depth study of the banks’ culture, it can provide the reader a glimpse of the cultural shifts in the two banks.
To analyze these two reports, I drew from the recommendations made by the UK Parliamentary Commission on Banking Standards in 2013 and came up with indicators to compare the two banks. For the sake of simplicity, I picked out very specific recommendations instead of broad topics that are beyond the remit of this blog. For example, I purposely excluded risk management as an indicator. Risk management is an enterprise-wide endeavor that is beyond my capability to analyze. In any case, all big banks have already improved risk management post financial crisis so I am going with the assumption that their risk management systems are strong.
Click on the link below for a comparison between Goldman Sachs and JPMC:
Next time: Observations on the comparison. BRB.