I have been thinking a lot about corporate culture lately. Some of this stems from my experience in recent months of helping to establish a business. Much of it also comes from talking to a range of business leaders, who have all been evangelising about the virtues of values within a company. Even hard-nosed corporate financiers have come around to the concept of company culture.

Far from being an abstract, esoteric concept, many companies are now embracing the idea of value-based decision-making, with staff encouraged to participate in the process of developing, designing and implementing corporate canons.

But mostly, I have been thinking about corporate culture through the context of the banks. Few industries have talked so much over the last decade about reengineering their value hierarchy and rehabilitating their culture.

First, Minister for Finance Paschal Donohoe gave a speech about the culture within financial services as he explained the new Senior Executive Accountability Regime (SEAR) that will, hopefully, hold senior bankers to account. Next, the Deputy Governor of the Central Bank, Ed Sibley, issued a significant rebuke to the banking industry, warning that bankers in Ireland and elsewhere are beginning to display echoes of pre-crisis hubris.

And finally, Johan Thijs entered the debate with an intervention that was both simultaneously telling and disturbing. The KBC group chief executive has since apologised for his “insensitive remarks” around the Irish tracker mortgage scandal, but the apology should not stop a meaningful interrogation of what he actually said.

Am I surprised by his remarks? Absolutely not. His comments merely confirmed what most people already know – there has been little cultural change across the Irish based banks over the past decade.

I have read the transcript of what Thijs said on a number of occasions now and also listened to the audio several times. He clearly had thought about it in advance and meant what he said. The only thing that felt contrived about the whole debacle was his apology.

“What is still an annoying thing is all tracker mortgage stuff and, honestly, we would recommend to Central Bank of Ireland: come on, guys, turn the page,” he told analysts. “We’re focused on doing business, we’ve learned our lessons, we know what to do.”

He added: “Let’s now stop doing all the nitty-gritty stuff, which is an administrative hampering of the development of the financial institution – and the financial market as a whole in Ireland.”

Thijs was clearly giving a firmly held view. Under pressure from all quarters, he later apologised. But, apology or no apology, this clearly is the view of the boss of the bank.

Am I surprised by his remarks? Absolutely not. His comments merely confirmed what most people already know – there has been little cultural change across the Irish based banks over the past decade.

Push past the slick slogans, the corporate patter and the soundbites (AIB’s most recent ad campaign about climate change is the sort of bandwagon-jumping that would do credit to Shane Ross), and there has been little real reform of banking culture since the financial crisis more than a decade ago.

Look at how the banks have treated their stakeholders – both customers and the main shareholder in the sector, the state.

First, we have seen the wholesale strategy of offloading problem loans to vulture funds, which allows the banks to improve their balance sheet while abandoning their responsibility to their long-time customers. Indeed, the strategy is merely a way of outscoring the future repossession to faceless funds.

Then, we have had the clamour for improved pay and enhanced bonuses for bankers, with financial instructions arguing that they can’t attract nor retain the top talent in the face of government-imposed limits. Thankfully, the government appears to be unmoved by the constant agitation.

We also saw the lobbying campaign against attempts to force them to actually pay some corporation tax by changing rules that allow banks to write off boom-time losses against tax. It is worth dwelling upon this point for a moment as it gives a sense of the psychology within the sector.

After bailing out the banks a decade ago, former Minister for Finance Brian Lenihan brought in a rule whereby they could only carry forward 50 per cent of losses against future profits. The last Fine Gael-Labour government scrapped this to allow 100 per cent of losses to be carried forward. This was done in order to improve bank balance sheets and avert the need for further capital injections. However, Fianna Fáil, and the Public Accounts Committee, have since argued that since banks are profitable, this justification is no longer relevant. Still, the rules remain unchanged following intense lobbying.

Tracking a scandal

But most pointedly, we have seen the ingrained arrogance of the system through the prism of the tracker mortgage scandal, a scandal that the banks have fought at every occasion.

Having been largely unregulated prior to the crash, there remains a perpetual resistance within the Irish banks to actually be properly regulated.

This is something even the Central bank has noted on several occasions, highlighting the intransigence of the lenders to admit to the full scale of the issue, and then to reimburse affected customers.

To get a sense of just what the culture is within the banks, just look at the various Central Bank updates on the tracker mortgage examination. This was contained in a report published last year:

“The Examination has exposed a clear lack of a consumer-centred culture in lenders. Culture is set from the top down. It is a matter for boards and senior management, in the first instance, to set a culture within a financial services firm that places the best interests of consumers first. While many lenders publicly state that they do put customers first, the evidence from the Examination suggests otherwise.”

It is not just on the issue of trackers that the Central bank has struggled to break the banks’ resolve. Ed Sibley, the deputy governor, gave a thoughtful speech to the Banking & Payments Federation Ireland (BPFI) a number of weeks ago. He addressed a range of issues, but some quotes stood out:

“On too many serious issues – such as tracker mortgages, non-performing loans, some Brexit preparedness issues – the Central Bank has had to push too many retail banks too hard over too long to actually put your customers first. Too often in the recent past the retail banks’ behaviours have not been consistent with your slogans and your stated desire to build trust and have longstanding relationships with your customers.”

Sibley also gave his views on the potential return of hubris to the sector, particularly in retail banking:

“There is a program on RTÉ called “Reeling in the Years”19.  A recent episode focused on 2007, showing footage of the Irish banks’ CEOs giving assurances about risks being well understood, highlighting record levels of profitability, and complaining about being shackled by regulation. And yes, there was a clip of the Central Bank giving assurance about capital levels.  While we need to avoid being obsessed with the past, we do need to remember it.  In short, we need to beware the return of hubris.”

The undertone to Sibley’s remarks was one of frustration. Having been largely unregulated prior to the crash, there remains a perpetual resistance within the Irish banks to actually be properly regulated. Indeed, it was telling that the banks only really moved on the tracker scandal when Pascal Donohoe summoned the top brass to his office for a good old-fashioned admonishment. Previously to that, their response to the Central bank’s efforts was one of a bullish disregard.

Donohoe touched upon the topic in his recent SEAR speech when he said there was “still some considerable distance to go” in the reform of Irish banking culture.

Referring to new laws that will hold individual bankers responsible, he said:

“The Tracker Mortgage scandal – for that is what it was – illustrated unacceptable practices that led to real suffering for those who lost their homes and were struggling to make ends meet.

The loss of trust and confidence in the banks as a result of this is hardly surprising. It is a matter of serious concern, and it will take considerable time and effort to restore this broken trust.”

The irony, of course, is that the lack of cultural reform comes at a time when the Irish banks are chronically underperforming, a point made by my colleague Constantin Gurdgiev earlier this week.

The trouble is that many bankers actually have bought their own construct and believe they have changed.

But it begs a question: why has there been so little meaningful reform of culture since the crash?

The answer, I believe, stems from the nature of the bailout. When you are not allowed to fail, you simply believe you have not failed. As John Looby argued earlier this week:

“The establishment believes banks are different and treats them differently. This is not a cyclical and temporary issue; it is structural and permanent. A universal reality confirmed by the recent travails of Deutsche Bank.”

By bailing out the banks in the manner that occurred, the banks were set apart, told time and time again that they were too big to fail, and were simply too important to the wider economy. This gives senior bankers a sense of impunity and removed the need for real, meaningful change.

The trouble is that many bankers actually have bought their own construct and believe they have changed. As such, talk of cultural change within the Irish banks is a dangerous conceit. Little has fundamentally changed. The same old arrogance persists.

Hopefully, the new regulations will help, by imposing individual punishments on individual bankers.

The comments by the head of KBC Bank Ireland’s Belgian parent on tracker mortgages highlighted yet again the lack of cultural change at the upper echelons of banking. Indeed, the actions of the banks give lie to the chatter of cultural rehabilitation.