Good Critical Thinking About Barclays Bank: Banking On Ethics
Ethics and social responsibility are both important in marketing. While ethics are largely concerned with good and bad decisions related to what is right or wrong, social responsibility refers to the impact of business decisions on society .
Banks and other financial institutions play a very important role in creating a healthy economy and a truly sustainable world. Banking and finance are an intrinsic value chain which is connected with a cycle of providing adequate financial products and services. Every morning banks estimate the amount of money they need to borrow from their peers to plug any holes in their balance sheets or whether they have an excess of available cash which they can afford to lend. LIBOR – the London Inter-Bank Offered Rate measures this cost of inter-bank lending, by setting out the average rate banks pay to borrow from another . The LIBOR rates are calculated on the basis of the data submitted by a panel of major banks. The LIBOR rates are the average rates which reflect the strength of banking sector as whole. It works as when a bank is charged a higher rate it means that other banks have less confidence in it. LIBOR is used as a benchmark against which a financial product is priced.
About Barclays LIBOR Scandal
Barclays is a British multinational banking and fincancial services company headquarterd in London. It was fined about $440 million by United Stated and British Finance Regulatory agencies for manipulating LIBOR for its own advantage thus giving a false picture about its economic health and financial stability.
This Barclay’s LIBOR scandal deals with the Ethics and Corporate Social Responsibility of the Executives and the institution as a whole. Ethics in terms of business is the study of what constitutes right or wrong or good or bad human conduct in a business context . As quoted by Peter Koslowski, banking is a powerful industry and every powerful action must be morally responsible and defensible. An ethical code of conduct for banking would therefore seem to be an obvious requirement.
The Barclay’s LIBOR scandal of manipulating LIBOR Rates and submitting lower rates to appear more stable than it actually was misled investors and loan seekers, raised a big question mark on the ethicality of the executives at Barclays. This unethical behavior was rejected by various economists. Dennis Kelleher, president of nonprofit financial watchdog organization Better Markets, Inc. condemned the executives saying that the banking leaders that do not embrace ethics need to be pushed out of the financial system.
This manipulating deed of the Executives of Barclay’s clearly showcased the negligence of social responsibility which such a big reputed Bank has towards its customers and society on a whole. They neglected the fact that they were the standards internationally and such unethical code of conduct and socially irresponsible deed of them would lead to the negative consequences on their customers who vested their trust in them. If the executives at the bank would have asked the question if LIBOR is the right thing to do in the long run, they would have certainly avoided these measures.
Conclusion and Recommendations
Barclays Bank for sure neglected social responsibility. Barclays Bank in order to be more socially responsible, should have taken the initiative to set the moral standard in banking industry. The institution and its executives should have focused on the long term vision rather than the short term benefits. Even after the scandal broke out in order to set things right and to ensure that such an event should not happen again the institution must have taken the following steps.
Instead of giving the baseless explanations of their wrongdoing and blaming each other they must have admitted it and may have made a public statement.
They must have reported the correct rates and must have reimburse the damages.
They must ensure their customers, the ethical decisions in future.
Thus, this Barclays case study describes the importance of ethics and social responsibility, which should be practiced in business to benefit the business and the economy as a whole. Ethics and moral responsibility in business helps in building the trust of individuals especially the investors and customers in the business. The present case demonstrates the pitfalls of a poor ethical and social responsibility system that hampers the growth prospects and reputation of involved organizations in the long run.
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