The rise and decline of a Belgian banking giant - Communication and business ethics in the Fortis case
S. Limbos & D. Phillips, PhD.
The Fortis case story has provoked a tremendous shock in Belgium. Though it is strongly interwoven with the global financial crisis, this is not the way the decline from this bank has been depicted in Belgian and foreign media. Other Belgian banks have experienced serious trouble and have requested government intervention. Other Belgian banks were unable to resist the temptation of what would later be described as toxic assets. But, for some reasons -and this contribution is about some of these reasons- the Fortis story has been considered as a typical business case showing the results of what banking greed (meaning the greed of bankers) can lead to. In the eye of the storm, all media directed their accusations at Fortis’s management. Both media and political discourse contributed to populistic narratives of banking villains finally being put in the dock. Other banks, though surviving with great difficulty, explicitly distanced themselves from Fortis. While former Fortis strong man Lippens was vilified as the most unethical banking crook, ING’s CEO made his point: “we may have made mistakes, but no ethical ones” (insert reference)
Only recently have the financial media broadened their scope when apportioning blame in the Fortis crash. However, the blame game stage has not yet ended. It is still mainly a matter of banker’s hubris, lack of risk management and greedy shareholders. In this regard, the Fortis story is very much embedded in a pattern of global myth construction regarding the bankers’ responsibility for the worldwide financial crisis. We will come back to this myth construction pattern later in this contribution.
The main question that has dominated the Fortis disaster’s story since the beginning is: “Could things have turned out differently?” With the benefit of hindsight, one realizes that other Belgian and foreign banks are ending up with difficulties very similar to the ones Fortis has been facing. The Fortis disaster can certainly partly be explained as a result of unfortunate managerial decisions such as the overly ambitious ABN Amro takeover and the massive investment in CDO’s. And yes, the takeover was obviously an attempt to become one of the key financial players in Europe. For many years, this ambitious drive from Maurice Lippens, the golden boy in banking and Fortis’ strongman, was granted with numerous awards and even an aristocratic title (baron). As regards the massive investment in CDO’s, Fortis was only one of a long list of banks which all made the same risky choices. From this point of view, Fortis acted in exactly the same way that it had always been praised for (aiming to be the top player), and in a very similar way to its competitors (CDO’s).
Leaving rights or wrongs of the managerial decisions, we have taken a closer look at the communication surrounding some decisive managerial moments .There has of course been an incredible production of communication in and about this case. In our contribution, we have concentrated on three communication aspects from which we believe they largely…. In a chronological order, these are: the European transition from annual reports to quarterly reports, the Fortis CEO’s verbal attempt to reassure shareholders and finally the interview with Maurice Lippens in June 2008, after an unannounced capital increase which implied the value of the Fortis share to be halved.
To situate communication events, one needs to understand the context in which it took place. Diana will now retrace the main events in the Fortis debacle so as to provide the factual background for our contribution.
Three decisive communication items
Transition from annual to quarterly reports
At the beginning of the crisis, Fortis Bank was a rather young bank....
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