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14 Feb, 2024 05:23

Top European bankers have secret club – FT

The Institut International d’Etudes Bancaires was set up in the aftermath of World War II to foster closer ties among financial institutions
Top European bankers have secret club – FT

For more than seven decades, a secretive and highly influential organization has been bringing together the heads of Europe’s largest banks twice a year at luxury hotels and royal palaces across the continent to discuss global policymaking among other issues, according to a report by the Financial Times on Monday.

The article highlighted that the existence of the Institut International d’Etudes Bancaires (IIEB) is barely known outside its membership while the group has no website and its meeting agendas are not made public. Members are reportedly discouraged from sharing details of the discussions. “This is not like Davos, where anyone can buy their way in,” one longtime member told FT on condition of anonymity. “This really is exclusive,” he added.

Some members have been complaining about lack of transparency within the group, which was set up to encourage closer ties among banks at a time of geopolitical tensions and challenges to financial stability across Europe. “We were members for decades when the organization served a purpose to bring European banks closer together,” Par Boman, the chair of Swedish bank Handelsbanken, told the FT. “But after the financial crisis we felt its extravagance and lack of transparency did not fit our values.” 

According to the report, the IIEB was established in Paris in 1950 by the heads of four lenders from across the continent – Crédit Industriel et Commercial, Union Bank of Switzerland, Société Générale de Belgique and Amsterdamsche Bank. The aim was to hold regular high-level discussions on developments in the banking sector, as well as the economy and monetary system.

The topics under discussion reportedly reflected the concerns of European bankers at certain periods of time. In the 1950s, for example, it was the formation of subsidiaries in former colonies, while by the 1960s, the attention had turned to the global role of the US dollar, the problems with the Bretton Woods system of fixed exchange rates and the threat of American takeovers of European banks. Towards the end of the century, the IIEB discussions were more concerned with the impact of the euro, the growing derivatives market, and M&A deals between big banks, the FT wrote.

“As Europe’s lenders come under pressure to improve their lackluster valuations – having fallen far behind their US rivals on profitability in recent years – and with the continent bracing for a long-heralded wave of cross-border dealmaking, the IIEB is entering one of its most important periods since it was set up in the aftermath of the second world war,” the paper wrote.

According to the FT, besides being a forum where Europe’s top financiers can exchange ideas, the IIEB serves as an elite social club where, over three days, the bankers’ spouses can enjoy gala dinners, private tours of historic landmarks and high-end shopping trips.

The report noted there has been almost no media coverage of the IIEB’s activities during its more than seven decades of existence despite the importance of the topics under discussion.

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