PRs representing bankers need not concede much ground to the moralists. Instead they should recommend their clients come out fighting. The advice from financial PRs should be: stand your ground; defend yourselves; get the rest of the business community behind you.

If banking clients have doubts about the merits of this approach, PRs should remind them that so far they have been very bad at making a serious case for themselves, which has made it hard for PRs to do so on their behalf. Moreover, bankers need not worry about going out on a limb. There are positive signs that the British business establishment is more than prepared to back British bankers and to condemn the anti-business rhetoric being spouted by the media, protesters and politicians.

This week a leading group of business folk, including Sir Michael Rake, chairman of BT and Easyjet, Sir Andrew Witty, chief executive of Glaxo Smith Kline, and Paul Walsh, chief executive of Diageo, will tell Prime Minister David Cameron to stop bullying CEOs. According to The Sunday Times, one of them will state that if Cameron’s government keeps bashing business:

Eventually companies will leave, and those that stay will not be able to recruit top talent.

That’s the bottom line. The British Establishment’s liberal courtiers are in danger of making the country Mickey Mouse about all this: scapegoating Fred Goodwin, whinging about rather ordinary pay and bonuses for HSBC, Barclays and other bankers.

Hence bankers should tell politicians and the media that the British people and City of London need thriving financial institutions more than they need them. That’s an arrogant message, perhaps. But it has the compelling merit of being an honest one.

PRs have to say forcibly that we need Hester to stay at RBS, and we need HSBC and Barclays to look like credible global businesses capable of attracting the very best to work for them: end of. The rest is noise.

It is unlikely that the public and media can be persuaded to agree with such messaging right now. Yet I doubt that the masses will be pleased over the long term if the liberal commentariats make the moral hazards of doing business in Britain too much for the banking sector to bear. So David Cameron (who can be convinced and needs convincing now) needs to be told that he won’t gain anything by banker-bashing. That pious positioning should be left to Ed Miliband, who is blindly stuffing his portfolio with this unelectable puff.

As several people have remarked, the public will be slightly more in favour of bankers etc. when in a few years’ time, Britain is the world centre of world class bankers. But if we lose this fight to the other side because Britain does not embrace banks and business, Switzerland, where I live, is one of many countries that hopes to profit from the UK’s demise.

Swiss bankers have never been popular in Switzerland. Instead, the Swiss grasp the truth about who needs whom more and why. They have long-acknowledged, however reluctantly at times, what drives business success. They value the benefits that accrue to the wider population as a consequence of allowing their financial institutions to function properly in a global market place.

So as I close this piece, here’s my insight gained from observing Swiss bankers. Bankers need to be trusted more than they need to be popular. To win trust they need to speak straight about the realities of their business. That won’t make them popular. BUT: there’s never been an era in history when bankers and money lenders have been popular. So get used to it; get over it.

Canny PRs have long seen this stuff clearly. To those that don’t yet get it, I say be careful which side you support because the stakes are very high indeed.

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This manifesto might seem a lost cause. Speaking at the RSA/Sky Sustainable Business Lecture Series in London, Richard Lambert, director-general of the CBI, the British employers’ group, said “what you might call Jack Welch [1980s] capitalism” was drawing to a close – a reference to the former General Electric chief executive’s championing of shareholder value. Last year Welch dubbed his old mantra “the dumbest idea in the world”. He added: “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

Richard Lambert advocates that doing good is good business and that:

“The risk now is that the public and political response to what’s happened will itself have troubling consequences. If you don’t trust an institution to behave well, you impose regulations – perhaps to a point that undermines the dynamic workings of a market economy, and in turn holds back the forces of job creation and sustainable economic development”

He’s not alone in thinking that shareholders are now just one of many competing interest groups CEOs work for. In a recent FT interview, Paul Polman, Unilever chief executive, said:

“I do not work for the shareholder, to be honest; I work for the consumer, the customer. I discovered a long time ago that if I focus on . . .  the long term to improve the lives of consumers and customers all over the world, the business results will come.”

I think these intelligent people are setting up a false dichotomy. Shareholder value is not necessarily at odds with social value. Customers and employees are not necessarily at odds with shareholders. Sure, running a socially respectable, customer-facing business may well be the ticket for shareholder value.

So I prefer the more robust approach of Lord Haskins, the former chairman of Northern Foods, who has questioned Mr Polman’s assertion that he does not work for Unilever shareholders, saying:

“Isn’t it the shareholder who appoints him, provides him with the funds to run his business, and awards him with his substantial pay package?”

Moreover, many firms, such as Swiss Re and DuPont, to name but two, still put creating shareholder value at the top of their stated objectives: see here and here.

To echo Michael Skapinker writing in the FT, before we consign the shareholder value movement to the dustbin, it is worth remembering why it arose: to prevent chief executives from running businesses in their own interests rather than those of the companies’ owners.

So here are my manifesto’s key points:

The problems:

• The emergence of a generation of CEOs who ran companies for their own benefit;
• A generalised passion for short-term stock value.

The solution:

• CEOs (agents) should be more accountable to the owners (principals) of their businesses;
• They should agree and assert the kind of firm they are running (long or short term value, for instance);
• They should communicate and sell these propositions.

Some principles:

• As a fan of Theodore Levitt, I’ve no doubt that Welch and Polman are right that great products, services and customer focus are the key ingredients of a successful company;
• No firm can function without a licence to operate;
• Key stakeholders need to be kept onside – employees, customers, suppliers and the like;
• If the longer term is what counts most, CEOs need to do more than they currently do to invest in innovation and in R&D (here’s a useful manifesto addressing this issue).
• Longterm profits matter a great deal to some firms, but that requires great flexibility and constant change.

PR challenge

PRs would do a much better job for their employers and clients if they spoke plainly and honestly about the realities of business. The current recession is caused by a crisis of profitability and negative growth. It is experienced as a crisis of confidence and trust. But it is not helpful to the cause of restoring growth and boosting reputations in society when PRs communicate that profit and growing shareholder value no longer matter most.

Today, the reality is that millions of people are losing their jobs, accepting pay freezes, going part-time, and feeling insecure about their futures, precisely because there’s not enough profit or a strong enough expectation of long-term shareholder value growth in the system. We’d all do better with our PR if we faced the truth rather than evaded it.

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Promoting his book in The Times Kaletsky says that after the recent crash capitalism is in a period of transition comparable to the 1930s and 1970s. As a leading US diplomat told him:

“Since the crisis, developing countries have lost interest in the old Washington consensus that promoted democracy and liberal economics. Wherever I go in the world, governments and business leaders talk about the new Beijing consensus — the Chinese route to prosperity and power. The West must come up with a new model of capitalism that’s consistent with our political values. Either we reinvent ourselves or we will lose.”

Kaletsky remarks that at Davos the world’s leaders were in denial. Instead of thinking about the future, it was easier to focus on the past, to quibble about regulations and argue about who was to blame.

Kaletsky thinks governments everywhere will interefere more on economics and maybe less on welfare.

I agree. There’s some big changes coming and it is time we discussed the choices we face.

It strikes me that Kaletsky’s book could be the catalyst that sparks the debate about issues such as:

• How will the West compete with China and India?
• Is Kaletsky right that the world has to choose either a Chinese or a Western model of capitalism?
• Will China remain overtly nationalistic and the West broadly globalising?
• How does AGW fit into this?
• How will the West define optimum state economic interference?
• Will the governing elite find economic policy hard to sell to voters?
• Will international competition lower the chances of bells-and-whistles CSR?

Richard Edelman I fear is on the wrong track when he predicts that Kaletsky’s findings fit well with the dominant messaging emanating from CEOs at this year’s Davos:

“The new expectation of business is as a social actor, doing well while doing good. There is a continuum for business executives, from sole reliance on philanthropy to a more complex change of business process to incorporate sustainability into operations.

My first observation is that CEOs were in denial when they belittled the importance of shareholder value and shareholders. My second is that change is about instability and that does not fit well with sustainability. My third is that the good that business does is business done well. The Edelman approach separates “doing good” from “doing well” as if there was something wrong or embarrassing or negative about the core function of business. The Chinese, on the other hand, have no such doubts about the virtue of business done well.

But we are agreed that things are about to happen. We are agreed that there’s a great debate to be had. And once again, even when I disagree with him, I say hats off to Richard Edelman for raising our horizons and for being at the forefront of discussion. The debate has begun. Watch this space.

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This year’s World Economic Forum in Davos was very downbeat. Still, even as profits are becoming difficult to make, we are still (Davos-style) asked to believe they’re not that important anyway.

To take one important example, Edelman’s trust survey reports that respondents rated financial returns at or near the bottom of their priority list in nearly all of the world’s major economic regions. Business, it seems, should be more concerned with wider social issues and causes that are not necessarily connected to its core purpose.

What’s this? False consciousness? Cognitive dissonance? Denial?

As Sandra MacLeod puts it – in an interesting piece here on sustainability and CR – the aha factor was “we can do well by doing good.” She makes some good points about CR, but they’re not ones that will help companies finance innovation.

Meanwhile, business leaders Twitterd from Davos things like “we have to change the success measurement system beyond just money and share price” if we are to rebuild trust.

Few business leaders at Davos felt confident enough to question the notion that shareholders and profit don’t matter most. Few argued that one big problem is that there’s too much waffle. It was almost taken for granted that all stakeholders are now equals.

So, I welcomed the robust counter view in The Times today from Jonathan Waxman, Professor of Oncology at Imperial College London. He makes a compelling case in defence of the importance of the bottom line. He highlights how much harm to the greater good can be done when the profit motive is undermined:

Today it is unusual to see people die in the industrialised world from diphtheria or pneumonia, and we are at the edge of developing effective therapies for Alzheimer’s, multiple sclerosis, rheumatoid arthritis and diabetes.

But where do these marvellous advances originate from? Not, as you might imagine, from the golden glades of the University of Arcadia. The universities have elaborated hypotheses and elucidated mechanisms, but it is the profit motive and the market that have been responsible for these life-improving changes. Big Pharma, that boggle-eyed devil in the undergrowth, has brought forward virtually all the drugs that make our lives liveable.

He points out how the bureaucratization of risk management by over-regulation strikes at the bottom line and sidelines R&D. This is no small matter.

SmithGlaxoKline is axing 6000 staff, mostly from its R&D departments, and AstraZeneca is cutting 8000 more, while Pfizer its slashing its R&D budget from an equivalent of around $11 billion today to around $8 billion and $8.5 billion by 2012. As Waxman says:

The bottom line does matter to the drug industry — and Britain has created a regulatory environment that makes it harder for them to make money and produce the drugs that we depend upon.

He calls for an overhaul of the regulatory system. I concur. I would add that in the interest of the greater good we need to overhaul our attitude to profit, and the bottom line, and to rehabilitate its importance in the public mind. That’s a pressing PR challenge.

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Investors can’t have it both ways. Given the contradictory responses, the one we should trust is the one respondents invest in. Lots of people seem to have resisted a “flight to safety”. What we seem to have is a generalised sense that one ought to feel at risk and say one has lost trust, whilst operationally one goes on trusting and taking risks with roughly whatever appetite one had in the first place.

But the public is not merely contradictory. It is nonsensical (or the FT’s questions were). What, after all, is someone saying when they insist they trust themselves to look after their savings? That they would rather keep the loot under the bed? Or are they saying that they trust their own advice more than anyone else’s? Wot, and not read the FT? Renounce unit trusts and pension funds (both of which make choices about where to put their client’s money)?

Most investors, said the FT, did not think they were adequately protected by the state (another surprise given how the state has backed the banks). But, reassuringly, the FT reports that it is not only savers who are sticking with the status quo:

“…. a majority of respondents in all European countries and the US have not changed the amount of risk in their portfolios, three in 10 Americans, one in four French and Germans and one in five Italians and Britons said they were now taking less risk. In Spain, three in 10 have reported that they were willing to take more risk.”

It seems, also, that most people in Britain, Germany and France have not altered their attitudes towards investing in the stock market compared with two years ago. So while some have reduced their risk, most have not, and some are already ready to up their risk levels.

The FT results reveal – if you can reveal the obvious – that the public has lost confidence in individual risk assessments and in the reputations that were once built upon sound risk management (trust and keeping promises used to be at the heart of City-type values). But what does this mean? That an institution can be less trustworthy but just as worth investing in?

So how can the PR high ground be seized without resorting to talking populist nonsense?

The best way to face the challenge is for banks and institutions to take the defence of their reputations in to their own hands (there’s a useful call to action in PR Week by Anthony Hilton: Bankers Still Live In PR-free Zone).

Moreover, if firms want to avoid the worst forms of regulation then they have to promote self-regulation as well as openness. My colleague Richard D North puts on it on a sister sister site – here and here - like this:

Instead of writing lots of rules which must be obeyed, the best regulators would name and shame firms and sectors which had not produced the sorts of voluntary schemes which offered appropriate (always optimum, not always maximum) safety. Those warnings would then reinforce the market’s tendency to produce satisfactory safety. The firms and sectors which were exposed would see custom drying up or stakeholders demand premiums.

That would really be a return to the values of “a man’s word is his bond”.

By the way, those wanting to read my more detailed account of the future of financial PR in the new era can read it here.

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There was something of the truly spectacular about the show Gordon Brown put on in London. The world’s political leaders embraced each other, while he masterfully orchestrated proceedings as summit chairman. Their display of seeming common-purpose was inspiring. As today’s Times reports, their positive approach certainly rubbed off on the public,

Moreover, the back-drop to the summit displayed a compelling mixture of British pomp and circumstance. Not least with Mrs and Mr Barack Obama and the Queen playing their charismatic and regal roles in glamorous locations. This added more allure to the whole event.

On reflection, one would have expected to see a higher priority given to the standing of the leaders of the real new world order in China, India and Indonesia. They were virtually eclipsed by the media-hogging grandstanding of the old powers Germany, France, Britain and the US. That sort of thing needs sorting out.

However, there’s no denying that the summit contributed to a measurable temporary mood swing in public confidence about the fate of the world’s economic future. It even caused a short-term stock market rally. But yesterday’s WSJ reports that the benefits of the summit were over-inflated:

On balance, the G20 meeting ended as a reality check. The leaders arrived in London with the media billing it as virtually the Committee to Save the World. Led by the Obama Presidency, we are living through a period of inflated roles for government in the lives of nations. What emerged from London suggests these are mere mortals and the real work of economic recovery will have to resume when their planes touch down back home.

The much-pumped $1 trillion stimulus package also does not hold up to scrutiny. The traditionally reliable Dominic Lawson pointed out in The Sunday Times:

The figure of $1 trillion duly made the headlines, but on closer examination – always a good idea with Brown – it transpired that the “new money” (as opposed to re-announcements of existing pledges) amounted not to the magical trillion but the equivalent of $250 billion in so-called “special drawing rights” from the International Monetary Fund. Even this is an off-balance-sheet item (another Brown favourite) since the IMF’s special drawing rights do not count as “real money” in the books of any of the lending nations.

That boost to IMF funding came just days after IMF boss Dominique Strauss-Kahn admitted his body has a major image problem that makes it difficult to allocate funds to third world countries because of deep-rooted mistrust stemming from past mistakes. He told a conference in Africa that:

For political reasons, it has become impossible for some governments to tell their public opinions that they will seek help from the IMF.

But during this crisis there is going to be no easy solution to improve the IMF’s image. For it does not take a genius to figure that many of the problems facing the world economy are indeed structural and that they will require drastic reforms – many of them painful – to set right.

The WSJ also exposes some other aspects of the G20′s so-called progress;

On taxes, the G-20 makes a forceful commitment to eliminate “tax havens”. The nominal point of this effort is to ensure fairness and eliminate “banking secrecy.” In fact, it looks like a last-ditch effort by nations whose spending has reached such levels that they’ve become desperate for tax revenue.

The much heralded new world order’s standard system of banking supervision might take years to agree. As the WSJ pointed out yesterday, the EU has been working toward such an objective without success for years.

I take no pleasure in reporting on the G20 summit in this tone. I wish things had worked out better for the long term. But they didn’t. Except that the protests outside the event were muted and mostly (though arguably not always) well-handled by the police.

But there is some good news, I think. Everyone knows Mr Brown always exaggerates the good he is doing. Everyone knows Mr Obama is long on rhetoric. I get the feeling that the peoples of the UK and the US are prepared to see their leaders a little more realistically than might be supposed.

In the UK in the mid-1960s and the late 1990s there was real disillusion amongst Labour voters as Mssrs Wilson and Blair were found to be quite right wing. Mr Brown has lost the power to disappoint us. There may be something like disappointment as Mr Obama’s fans find he and they still live in the real world. But I doubt it will be an intense let-down. If Brown and Obama only do quite well, the public will probably accept that as OK. Whether either would get re-elected is a whole other thing.

The G20′s positive media coverage reflects the public’s hope that its leaders shape the future. They accept it’s a tough business. There is more trust, or at least goodwill, out there than many suppose.

All the same, our leaders would have served us better if they had responded to our newish realism. The problem with last week’s PR campaign is that any short-term benefits it generated will in the longer term do more harm than good. Once the lack of substance behind the claims of founding a “New World Order” are exposed, the feel-good factor wears off. Surely, good PR has to be strategic and long term rather than short term and tactical?

Brown in that sense missed an opportunity at the G20 to rehabilitate himself and repair his tarnished reputation. Had he set a realistic tone and sent a message of limited, but worthwhile, progress, he might have won longer term public trust. But he could not resist first over-selling his expectations, and then over-selling his achievements. Thereby, he set himself up for a fall.

The challenge in Britain now lies with David Cameron’s Tories. It is for them – if they want to be leaders – to tell it as it is. They need to highlight the tough but necessary steps Britain’s – never mind the world’s – economy must take to get back to economic growth.

I continue to believe that the real political trick now will be to talk frankly. The signs are good that the public can take it.

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PR firm Cohn & Wolfe director Ros Hunt writes that, “a successful response to a crisis situation starts with the senior executives and flows through the workforce directly to consumers.” Hunt says that too few senior financial executives have been explaining their role in events. I agree. Except that I would make a few honourable exceptions. John Varley of Barclays and Michael Coogan at the Council of Mortgage Lenders have been excellent. Moreover, Stephen Green of HSBC deserves praise for his upfront comments at Davos.

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The exodus of Davos Man has quieted the skies above my home office on Zurich lake. I now have the luxury of rummaging in peace through FT.com’s analysis of the World Economic Forum held up the road and over a few hills. Perhaps most importantly, there’s a challenging The hot air of CSR, by Stefan Stern, the FT’s management writer.

Before exploring what Stern says, I note that the FT boiled down the conclusion of this year’s Davos meeting to a few words. It says that the “economic crisis has destroyed many rules the world has been using – the only certainty now is pain”.

Stern begins his report by explaining how the “rediscovered responsibility” at Davos was really an acceptance that firms need to make a profit to stay in business. He then recounts a recent House of Lords closed door meeting at which he found serious PR CSR advocates in a reflective mood:

One executive declared: “I can’t stand writing CSR reports. I hate it. It’s so boring.” Another – in fact our co-host, Michael Littlechild, the head of the advisory business Good Corporation – conceded that, for many business people, CSR was just a case of BDF: “babies, dolphins and forests”.

He highlights that:

There is a mismatch, to put it mildly, between the politically correct rhetoric of a chastened global elite and the reality of what managers have to do every day of the week. It is easy to get confused by these mixed messages. Is it time to embrace the new morality, or to drive the business even harder in search of every last bit of revenue? What should this new era of responsibility look like?

Stern’s right to suggest that mixed messages cause confusion. He’s also right not to back Richard Edelman’s Davos call to put on a par with maximising profits other ideals such as “public engagement”, “corporate mutual social responsibility” or “private-sector diplomacy”. The last by the way is corporate activism on global concerns such as climate change. Elsewhere, Jeff Jarvis usefully describes this activity by its right name, PR.

The PR agencies’ clumsy new vocabulary smacks of old wine in new bottles. One gets the feeling the profession is merely reinforcing boom-time communication practices. One wonders why leading agencies are not properly considering offering their clients a refreshed strategy.

Contrariwise, Stern gets straight to the heart of the issue. He questions whether there really always is a straight-line connection between CSR, reputation and the bottom line. He says:

Customers may decry company X in a focus group or opinion poll. But where do they do their shopping?

He cites as a case study the UK discount fashion store Primark. He describes how its name has been dragged through the dirt in the past year, after worrying aspects of its supply chain were uncovered. Stern points out that its sales figures have risen by 18 per cent (aided by new store openings) in the 16 weeks to January 3, when almost every other UK clothes retailer was struggling.

Of course this does not prove that reputations do not matter. Neither does it mean that Edelman is wrong to advise firms to engage, discuss and find points of mutual self interest with stakeholders.

Stern’s view does, however, add substance to the argument put by Sir Terry Leahy the chief executive of the UK’s leading retailer, Tesco, that do-gooders often do more harm than good.

Stern explains how if Tesco wants to continue competing on price, it will keep up the pressure on its suppliers. He then asks whether this constitutes “corporate social irresponsibility”? He concludes: hardly. Instead, he says, the truly responsible thing to do is to run a good business competently. He concludes:

As the wise CSR practitioners know, it is how you do business that counts. All the rest is just hot air.

In my view, the buzzword that will replace CSR will be sustainability, and business sustainability will be at the front of all the jostling sustainabilities which campaigners and others will suggest. Profit and business models will be at its core. Shareholders will ensure that their interests are put first. They will demand more transparency and accountability from management. They will be more active and less trusting. Traditional values and professional ethics will become highly valued virtues and the true measure of corporate responsibility.

Wider issues such as environmental risk will still be on the agenda to an extent depending on the specific nature of individual risk. Barclays has already acknowledged that point. Others will follow. Watch this space for reports on the new language and development of CSR and corporate responsibility.

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The BBA communication team seem to think they are in the audience. Why aren’t they on the stage directing their own drama?

It is clear that the banks are getting a bad media rap. It might also be true that journalists do not understand the credit crunch and the recession well. However none of that justifies the BBA’s moan.

There’s been a chronic shortage of banking spokespeople lining up to tell us what’s been going on.

The notable exception being John Varley of independently-minded Barclays. That one is also a hard sell. The Times reports confidence and trust are at such a low-ebb that Barclays’ £5.3 billion or more expected profit has not improved perception:

As a public relations brief, it is the financial equivalent of defending vivisection or the transportation of nuclear waste through a pretty village: you think your case is solid and justifiable, but no matter how hard you argue it, nobody wants to listen.

We certainly don’t need lots of PR spokespeople speaking up as much as lots of senior people explaining themselves. But Lesley McLeod tells PR Week:

The story has moved away from financial journalists either because newspapers do not have the staff any longer or because it is dealt with on the news pages. Clearly some of these journalists do not have an understanding of the issues.

A lot of these people are now either inexperienced or they’re taking [information] directly from PA.

According to McLeod, the Treasury PR machine is more interested in communicating political messages than the financial intricacies to the media. So what’s new? Their first loyalty is to their political bosses. Neither that fact nor media “illiteracy” about banking issues should surprise.

In the early 1990s as head of media relations at the Council of Mortgage Lenders I saw for myself how bad news gets politicised fast. It is an old challenge listed on every well-rehearsed crisis management plan.

The problems the banks face are of wider importance to the firms PRs represent. There is a pressing need to develop PR strategies for this recession and the recovery that will follow. At stake is the restoration of trust in financial institutions and much more.

The way forward is for PR machines to take responsibility for communicating their messages to audiences.

The swift disintermediation of traditional media institutions creates opportunities for PRs to create their own media. For instance, if the media are so bad, where was the brilliant bankers’ website(s) daily pumping out the good stuff so readers could go to the horse’s mouth without the intermediation of the useless press (if that’s what it is)?

Today’s bankers can create their own Web-based media machine easily and cheaply – print, TV, radio, interactive and direct. There are numerous platforms to exploit from YouTube and Facebook to Twitter; and a thousand others that the banks can invent. They are not reliant on traditional media to get across their point.

New media or Next Media – as Charlie Beckett of POLIS calls it – allows them to communicate proactively over the heads of or alongside traditional media. In that sense Obama shows the way forward. He has created online network ready to mobilise. He uses his network to interact with and influence the mainstream media agenda.

Don’t get this wrong. “Old” media are not redundant and “new” media triumphant. It is not that simple. There are no substitutes. More it acknowledges that there is a new way to cement bonds with stakeholders. Effective communication today requires a more public participatory and connected process, with journalists no longer being gatekeepers, but facilitators, and news being more of a process, or service.

Banks are walking a tightrope. They have savers, borrowers, shareholders and taxpayers to consider. The forces at work are contradictory, and often their interests are irreconcilable. It is no wonder, then, that the media have lots of conflict to report and different interest groups’ gripes, fears and worries to portray.

The banks, on the other hand, have unique insight. They should be explaining the banking crisis, nationalisation…credit crunch…extent of liabilities such as toxic mortgage debt, and promoting the solutions for rebooting the system. Banks and their PRs have to make plain how things really are. Moaning will not do.

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He apologised properly, shouldering responsibility for his industry’s role in creating the recession. He was realistic about the future. He set absolutely the right tone and communicated some tough messages.

Asked by Sky TV’s Jeff Randall (see the video below) whether he agreed with Nobel Peace Prize winner Paul Krugman that the financial collapse seems certain to turn a run of the mill recession into something much worse, Varley replied:

Oh, yes, there’s no doubt about that. If you look at the players who were involved in what’s happened to the world, I think there were quite a lot of players involved. They would include central banks, they would include governments. But they would certainly include the banks. And the banks have to be prepared to have the humility to acknowledge that and accept it, and to say sorry. It is important that the industry is in that space. Partly because they need to take their share of their responsibility; we need to take our share of the responsibility as an industry. And partly also because banks need to be at the table when the reconstruction and the remediation is discussed and agreed.

On the Today programme (listen again on their BBC website page for 20 December, 2008) Varley forthrightly admitted that some of this is a PR matter. The banks need to rebuild their reputations. He seemed effortlessly to understand this was a moment when messages matter. It may be that Varley is in especially good shape to speak both humbly and robustly because he hasn’t yet taken the tax-payer’s shilling. So he accepts some of the blame for this mess but is in the relatively attractive position of wanting to dig himself out of the hole by himself.

A PR professional is bound to ask whether Varley was tutored in his messaging and its style, or is a natural. Who cares? He got there. No-one else at his level, or anywhere near it, has been as good, or anywhere near it.

It is worth reprising some of his messages:

• Last ten years were an anomaly rather than normalcy.
• Explosion in price of assets as a result of the easy availability of money.
• Loan to value ratios in British houses, available at 100%, 115% or 125% of the value of a house: “looking back on it, madness”.
• Unemployment rising to 7.5% of the course of the next 12 months, with unemployment in the UK reaching 2.5 million by the end of 2009.
• Negative house price inflation, still has another 10% to 15% between now and the end of next year.
• Many customers struggling with the slowdown in the economy, and our obligation is to be as supportive as we can.
• Barclays and the big banks are open for business.

How can the answer be yet more cheap debt, lower interest rates, surely that cannot be the solution?

What the economies around the world need is a burst of stimulus. It is perfectly clear to me that within that package there needs to be, and there are now, lower interest rates. For millions of our customers as a result of the cut in base rate; millions of our mortgage customers, millions of small and medium-sized enterprise customers are now getting the benefit of lower monthly debt service costs. That is, I think, a good thing as they struggle through the economic slowdown of the next 12 months or so. But if you ask me should we have perennially low interest rates, absolutely not.

I think you could say that one of the big drivers of this crisis has been easy money made available by central banks around the world over the course of the last seven years. It has absolutely been a catalyst of the crisis. So I accept that point. Getting the balance right is not easy. But that’s what – frankly – governments, and central banks, and indeed commercial banks like this bank have to get right.

Commenting on his bank’s struggle to maintain his bank’s independence he says:

• From the point of view of shareholders there is a significant advantage to independence.
• If British taxpayers’ money is deployed in a bank a big part of the agenda of that bank has to be directed at the UK.
• But Barclays is more than a UK bank – it employs more people outside the UK and has more customers outside the UK.
• It is important that growth outside of the UK is unimpaired.
• What you want is alignment between your shareholders. The commercial interests of shareholders need to be aligned.
• There is a significant difference – candidly, in the context of alignment – between taking UK government money, which has to carry some social agenda with it.
• Compare that with the commercial interests of the sovereign wealth funds who have invested in Barclays. There is complete alignment between the interests of those sovereign funds and the interests of our institutional and personal shareholders.

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