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NewsJanuary 2 2006

Window on the world

Stephen Timewell traces eight decades of The Banker, which has reflected global historical changes through the years, and he profiles its founder, Brendan Bracken, whose influence is still felt today.
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For eight decades The Banker has been a prime source of global financial intelligence and a window on the world’s key banking and economic developments. Rarely do magazines reach such a venerable age – and even more rarely do they maintain the vision and thrust of their founders.

From January 1926, under its founder Brendan Bracken, who later became chairman of the modern Financial Times from 1945-1958, The Banker has provided a global vision of the financial world that stretches well beyond the UK domestic market, reaching from South America to India and beyond.

This first issue, which cost one shilling, carried an intriguing profile of Montagu Norman, the governor of the Bank of England, by Sir Robert Horne, a former UK Chancellor of the Exchequer, and articles discussing the merits of bank mergers and the Labour Party’s policy on bank nationalisation.

But the magazine’s international character – which continues to be its hallmark today – was also very much in evidence then. The chairman of Anglo-South American Bank analysed banking developments in South America, the various classes of banks in India were assessed and the former prime minister and finance minister of France, Joseph Caillaux (who later became The Banker’s regular Paris correspondent), waxed eloquent on the financial situation in France in not only English but French as well.

And the advertising in that first issue also reflects the international flavour of the magazine. Although almost all the ads were bunched together at the front, in the style of the era, 33 institutions from 17 different countries participated and some, such as the Prudential, Banco do Brasil, and Standard Bank of South Africa still maintain their names. Others, such as Bankers Trust Company, The Mitsui Bank and Ottoman Bank have disappeared over time.

The Banker was distinguished not only by its international nature but also by the gravitas of its contributors, and this continues to the present day. In March 1926, one of the century’s foremost economists, John Maynard Keynes, profiled the 19th-century economic sage Walter Bagehot. And reflecting the range of views discussed at the time, that issue also contained an article from the Italian finance minister, Count Volpi, on “The Achievements of Fascism”. Later that year Harold Macmillan, who became UK prime minister decades later, commented on local government finance, and in May 1928, H G Wells wrote about the money credit system.

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The history of The Banker in fact represents an extraordinary collage of the events and issues surrounding the world’s pre-eminent financial centre. Given London’s position and Brendan Bracken’s unrivalled political connections, his editorship until 1937 set the tone of the monthly – and for others as well. A former editor of The Economist, Donald Tyerman, wrote that Bracken was the creator of modern financial journalism, while former Financial Times editor Sir Gordon Newton acknowledged that he set the standards that still infuse the newspaper.

In the 1930s, The Banker unsurprisingly focused on the aftermath of the Wall Street crash and the Great Depression and in January 1936 the issue included Paul Einzig’s view of the ‘Mañana standard’ and its difference to the ‘gold insolvency standard’; an assessment of the new headquarters of the Hongkong & Shanghai Banking Corporation; and an analysis of ‘Palestine Banking’.

The Banker published uninterrupted throughout the Second World War, addressing core financial issues. In the January 1946 issue, Mr Einzig discussed ‘Economic Peace in our Time?’ and J Grahame-Parker wrote about ‘The Nationalisation of the French Banking System’, which had taken place the previous month. 1946 was significant for the establishment of the Bretton Woods twins (the IMF and the World Bank), which, for better or worse, have probably occupied more column inches than any other pair of institutions.

Under long-time editor Wilfred King (1946-66) The Banker addressed the era of post-war economic expansion and the beginning of big bank mergers in the US in the mid-1950s, such as that of Chase National Bank and the Bank of Manhattan.

In January 1966, the magazine clearly reflected the passage of history in its leader ‘Warning from the Fed’, which read: “It would be a pity if the furore set off last month by the action of the US Federal Reserve Board in raising the discount rate from 4% to 4.5%, higher than it has been for 35 years, were to distract from the need to see the move in perspective. Obviously enough, it amounted to a clear defiance of the Administration’s repeatedly voiced hostility to dearer money.” Such issues still have resonance 40 years later.

1970 was a landmark year for The Banker with the first ever annual worldwide ranking of banks. Then only covering 300 banks and based on asset size, the rankings have since expanded to become the Top 1000 World Banks (based on Tier I capital). Today The Banker’s Top 1000 ranking and other country and regional listings represent the definitive source of bank data across the globe.

By the 1980s, as the LDC (less developed countries) debt crisis demonstrated the fragility of financial sectors, new rules and regulations proliferated and bankers adjusted to new market conditions. But some perennial issues continued. For example, Julian Walmsley wrote in January 1986: “New techniques to counter interest rate volatility have helped to erode the US banks’ competitive position against the securities houses.” And The Banker interviewed Charles Winter, chief executive of Royal Bank of Scotland, which faced “a difficult task in bringing together a newly-merged group (now including Williams & Glyn’s and Charterhouse Japhet) and expanding its English branch network”. Does this RBS position sound familiar today?

In recent years banks have become preoccupied with mergers and acquisitions, capital adequacy and increasing regulation but they have also become much more customer-focused and much more profitable. Basel I capital rules have helped create a more level playing field in an increasingly globalised world. And technology has become a catalyst not only for change but also for increasing mergers, consolidation and efficiency.

Reflecting on technology, change and banking, Bill Gates, chairman of Microsoft, noted in our January 1996 Viewpoint article: “The status quo in almost any sphere is usually reticent to embrace change, but a glance through the 70 years of reporting within The Banker should offer comfort. It shows an industry that is robust and adaptable – and, unlike the dinosaurs, well positioned to benefit from evolution.”

Today banks are more profitable than ever. In our 2005 Top 1000 listing, the overall level of profitability (pre-tax profits to Tier I capital) rose to a staggering 19.86%, a record and almost double that of the 1999 listing. Will this growth continue? While The Banker does not claim to have a crystal ball, it does provide the data and financial intelligence to understand the issues and build a sustainable forecast.

In addition to our listings, The Banker introduced its banking awards in 2000, including both commercial and investment banking. Our 2005 Bank of the Year Awards covered a record 138 countries, representing the best banking performances across the globe.

≈As, in January 2006, The Banker enters its ninth decade, the universal banking coverage and global commentary that characterised Brendan Bracken’s first issue continues to guide the magazine. And we believe that this model, as Bill Gates suggested, will be robust and adaptable to take us to our centenary and beyond. Brendan Bracken: Banker founder and influental figure  

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