andrew g haldane : credit is trust speech by mr andrew g haldane, executive director, financial stability, bank of england, at the association of corporate treasurers, leeds, 14 september 2009. i would like to thank paul fullerton, simon hall and salina ladha for help in the preparation of this speech. * * * it is good to be back in yorkshire. i say back because i grew up around 10 miles north of here. when i left over 20 years ago, leeds looked and felt very different to today. nowhere is the contrast greater than in the financial sector. in 1995, almost 74, 000 people were employed in financial and related business services, accounting for around 20 % of employment in leeds. by 2009 this had risen to over 116, 000, or around 30 % of employment. today, leeds has a legitimate claim to be the uk ’ s second largest financial centre. a short history of banking in yorkshire the foundations for this success were laid much earlier. the history of banking in yorkshire dates back over 250 years. 1 pease and co of hull, established in 1754, are thought to be yorkshire ’ s oldest private bank. in the same decade, banks were founded in leeds and bradford. by the end of the 18th century, yorkshire had a well - established network of over 40 banks in around 16 regional towns and cities. in the first two decades of the 19th century, private banking in yorkshire continued to thrive, spreading to around 30 towns and cities. the financial crisis of 1825 brought an end to this rapid growth. the crisis itself was interesting for its parallels with today. it was sourced in sub - prime lending in ( in this case south ) america. as fears of loan losses rose, runs began on banks throughout england, with more than a dozen institutions failing in yorkshire alone. the crisis brought reform of the banking industry in the form of the joint stock banking act of 1826. this removed the bank of england ’ s monopoly on joint stock banking. this had long been a bone of contention among country banks, not least in yorkshire. the bank of england itself opened its first branch in yorkshire – here in leeds, in fact – the following year in 1827. this was acknowledgement of leeds ’ emerging importance as a financial centre. yet the reception it received was, to say the least, somewhat mixed. local newspapers and businessmen attacked the bank ’ s attempt to spread its “ pestilential branches ” into the regions. 2 bank of england

, presenting a compelling vision and acting as role models – all drivers of financial performance. 2 http : / / www. mckinsey. com / business - functions / organization / our - insights / why - diversity - matters. https : / / hbr. org / 2012 / 03 / a - study - in - leadership - women - do. bis central bankers ’ speeches research on board membership has also shown that female directors enhance board independence, partly because women bring different perspectives and networks to the table, and partly because they are more likely to ask difficult questions. 3 there is also evidence of a point of critical mass – when there are at least 3 out of 10 women on the board. 4 and it ’ s well established that diversity encourages debate, leading to more creative thinking, and that heterogeneous teams are more successful at solving complex tasks, particularly when people have a shared goal. 5 almost all decisions in finance are taken under uncertainty. even if there is a range of known plausible outcomes, distributions of these outcomes are unknown. this makes it especially important that decision makers are exposed to a range of views, with open debate that includes perspectives that challenge prevailing wisdom. moreover, when there are judgment - based responsibilities – such as assessing appropriate values and conduct – diversity is crucial. the value of diversity permeates organisations. sustained emphasis on diversity in hiring and development programs promotes improved values throughout an institution and acts as a catalyst to sustained behavioural change. in its first report on diversity and inclusion published in november, the bba highlighted progress in the banking sector, driven in part by the davies review and important industry initiatives like the 30 % club. 6 encouragingly, the proportion of ftse 100 female board directors has risen from 12 % in 2007 to 26 % in october 2015. the bba rightly stressed, however, that more needs to be done to raise the number of female senior managers, and, more generally, tackle the reputation of the industry for “ pinstripes and braces ”. that is why jayne - anne gadhia ’ s report, brimming with practical recommendations, is potentially so valuable. to be clear, the report ’ s recommendations are voluntary, they are not regulatory requirements. it is for institutions themselves to determine how best to take forward the findings. in this regard, i would like to commend the leadership of those here today who are committing to implement the steps recommended. the principles, values and recommendations of the report are familiar