Smaller, less ambitious and less profitable – those aren’t goals many managers would choose to set for their business.
But coming from the mouth of Steve Pateman, head of banking at Santander UK, that’s exactly what we want to hear.
Banks should take pride in providing a solid, reliable and boring service.
That’s what they used to be known for. We respected them for it. And if they’d stuck to what they were good at, the economic mess we find ourselves in today may never have happened.
There will always be a place for speculation in the banking industry. Any kind of investment is a bit of a risk.
But it was when established high street banks got into the business of taking major risks in the hope of chasing major profits that our troubles began.
Some, such as Northern Rock, began lending to all and sundry, motivated by a desire to grow their businesses as swiftly as possible. They assumed that ever-rising house prices would ensure they got their money back even if loans were defaulted on.
Others engaged in casino banking, sometimes by buying up debts (directly or indirectly) from US lenders who had behaved rather like Northern Rock. But they were not meant to be risk-takers, playing the market like big investment banks. These were high street names which we looked to for stability and constancy.
So Mr Pateman’s prediction that banks and their shareholders will have to get used to lower returns and less ambitious rates of growth comes as a breath of fresh air.
He is also saying exactly what needs to be said in order to restore confidence in the banking sector.
Bankers who promise massive returns aren’t going to impress anyone right now.
But Mr Pateman does raise a difficult issue. There is a contradiction in the general mood towards the banks at the moment.
We want them to behave responsibly and accept reasonable profits instead of taking major risks.
We also, however, want them to lend to businesses. And the fact that they are now reluctant to take risks is one of the reasons they are also failing to lend as much capital as industry currently needs.
This is a circle that only Government can square – not that there are any easy answers – and we’ve seen it happen to an extent, as Ministers look for ways to get capital out to industry.
From the regional growth fund to the green investment bank, Ministers are trying to get money into the hands of employers.
Critics would also call for more public spending to boost the economy, although the gap between the modest spending cuts imposed by this Government and the slightly more modest cuts proposed by Labour is smaller than any of the parties like to admit.
But one thing that is essential for economic growth is solid high street banks which rarely hit the headlines – and which we all feel able to trust with our money.