Wall Street was buzzing this week after Greg Smith quit his top executive job at Goldman Sachs with a scathing criticism of the investment bank in the New York Times. In Switzerland, where banking secrecy is paramount, his public act is virtually unthinka
ZURICH - It was the financial story heard around the world this week: investment banker Greg Smith, who managed assets worth billions and oversaw a dozen top staffers at Goldman Sachs, handed in his resignation letter in the most public way possible. Smith penned a New York Times article that explained why he was resigning as executive director, slamming the way the prestigious Wall Street bank does business. Every trace of integrity has disappeared from company culture; all that matters is money, Smith wrote, and Goldman Sachs clients -- routinely referred to as "muppets' -- are systematically ripped off.
The story made a particularly strong impact on the Swiss banking world – not so much for its contents (Goldman Sachs has the reputation of being one of the most rapacious Wall Street firms) as for the circumstances surrounding the revelations. That a top banker making accusations that serious would go public like that is nothing short of sensational in Switzerland.
"Anybody who reveals to the outside what goes on inside a bank is breaking a taboo," says Peter-René Wyder, president of the Swiss Bank Employees' Association. Professionally, such a person is finished in the industry: banks shy away from publicity the way the "devil avoids holy water" Wyder quipped.
But you don't have to be a senior-ranking Wall Street shark to ruin your future by going to the media. Tages-Anzeiger spoke with one woman who ought to know. In 2009, as a result of "restructuring," she was out of a job after 30 years with Swiss bank UBS. Disappointed and angry, she talked about the experience on Swiss TV. Her appearance made finding a new job that much more difficult. "Human resources managers may not admit it," she says, "but go to the media and you're branded for life, you will not be re-employed in banking."
Denise Chervet, central secretary of the Swiss Bank Employees' Association, says workers in finance tend to be cowed and afraid to recount their woes to the labor body "even anonymously." Particularly in the big banks, the working climate has gotten much worse over the past decade.
Disloyalty punished by "death"
"They are under increasing pressure to bring in clients and make profits," says association president Wyder. Conflicts of interest are frequent; client interests, instead, are often not respected, as they are mainly sold products that the bank is going to earn the most money on.
However, anybody who states this publicly is in for some big problems. What is perceived as a lack of loyalty is equivalent to a death sentence, says one Zurich headhunter. Anyone in finance who goes to the media, or writes a blog containing negative content about the sector incurs huge risks, even if they do it anonymously: people know each other in the sector, and it quickly becomes clear who is behind the criticisms.
Those in the sector who take legal action against employers – for example, over disagreement about commission payments -- are also in for a hard time. According to the Zurich headhunter, the only possibility of finding a new job for such employees, no matter how brilliant their qualifications, is simply changing sector.
Some Swiss bankers, afraid that having worked for an American firm could turn out to be a stigma, are presently changing jobs anyway. And financial institutions are also taking measures: contracts are spelling out what will happen if a banker decides to spill the beans to the media, further ensuring that bankers keep a zipped lip about what happens on the job.
Against this background, the fact that Greg Smith aired his opinions in the world's most-read newspaper deserves attention. "Respect," says the former UBS employee who has yet to find another job. She says that virtually no one else fired when she lost her job had the nerve to speak up. But she's also clear that only a top earner could afford to do it: "Some of us wouldn't even have the money to pay a lawyer," she says.
But for the Zurich headhunter, Smith's tell-all article leaves something of an aftertaste. "Why only go to the media now?" he asks. For some in the financial sector, in fact, Smith's criticisms are nothing short of hypocrisy. As an executive director, he benefitted for years from exactly the climate he is now taking to task.
Read the original article in German
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