The Sunday Leader

Austerity in good times

Spanish banks relative to their peers were able to weather the global financial downturn better because their laws made it mandatory for banks to top up their reserves in good times, an official said.

Ms. Gillian Lees, Thought Leadership Specialist, CIMA London, quoting CIMA’s Professor of Management & Accounting at the London School of Economics at a seminar in Colombo on Thursday said when times are good, management does not bother where the good performance comes.”

He was referring to the derivatives scandal that led to the collapse of the global financial system last year.

Lees continuing said that to be sustainable, like the Spanish banks, companies should build proactive defences. The theme of the seminar was “Reshape your Business.”

Referring to the near collapse of the Royal Bank of Scotland (R.B.S.), she said that R.B.S. had a powerful C.E.O. whose decisions were not questioned by the Board. The result, R.B.S. unwisely acquired A.B.N.-Amro.

Lees also emphasised the importance of asking the right questions at Board meetings. R.B.S., before it acquired A.B.N.-Amro, it had a “million” Board meetings, “But if you don’t have the right questions, then all is vain,” she said.

Not only should one ask challenging questions, those should be followed by challenging the answers, Lees quipped.

She also said that after the post Enron and WorldCom debacle at the turn of the century, in 27 similar case studies done, the findings were “There was blind faith in leadership that was ill-equipped for the task.”

1 Comment for “Austerity in good times”

  1. I don;t know how you find the time to write so well but here is a little something

    If at first you don’t succeed, skydiving is not for you. :)

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