IDEAS home Printed from https://ideas.repec.org/p/rug/rugwps/11-726.html
   My bibliography  Save this paper

The collapse of a European bank in the financial crisis: an analysis from strategic, stakeholder, ethical and governance perspectives

Author

Listed:
  • Y. FASSIN

    ()

  • D. GOSSSELIN

Abstract

In 2007, the sub-prime mortgage crisis in the US spread to Europe and to the rest of the world leading to a global financial crisis without precedent since the 1930s. Banks stopped trusting each other, pushing the world’s economy into the deepest recession of the post-war era. After the collapse of the Lehman Brothers bank and Northern Rock in the UK, mid-September 2008, the Fortis group was the first major European bank and insurance company to fail in mainland Europe as a result of the financial crisis. Fortis was the leading Benelux financial group, with worldwide activities and one of the top five financial institutions in the EU. Until then, Fortis had been a success story of successive mergers of bank and insurance companies. Its leadership in corporate social responsibility (CSR), stood as a model for international cooperation, with Belgian and Dutch roots. The acquisition of a major part of the important Dutch financial conglomerate ABN AMRO, was a further step to bring Fortis in the top financial groups in Europe, with market leadership in Benelux. However, one year after this acquisition, as a result of the crisis in the financial markets, trust disappeared in the sector, leading to the collapse of the Fortis group. This fall has been one of the key events in the history of the Belgian and Dutch economy, with tremendous impacts and important consequences for all stakeholders and for the Belgian economy. The purpose of this article is to use the collapse process of Fortis’s during 2008 - 2009 as a basis for reflective considerations from strategy perspectives, stakeholder, ethical and corporate governance perspectives. The case analysis of the fall of Fortis based on those perspectives is relevant since Fortis group was internationally recognized as an example of good and leading practice in the field of CSR. Additionally most literature on causes of irresponsibility is in the fields of economics, and specifically the economics of market failure. The business ethics literature tends “not to address explanatory questions about the causes of CSR breaches” (Mackenzie 2007: 936).

Suggested Citation

  • Y. Fassin & D. Gossselin, 2011. "The collapse of a European bank in the financial crisis: an analysis from strategic, stakeholder, ethical and governance perspectives," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/726, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:11/726
    as

    Download full text from publisher

    File URL: http://wps-feb.ugent.be/Papers/wp_11_726.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. repec:dau:papers:123456789/406 is not listed on IDEAS
    2. Marcoux, Alexei M., 2003. "A Fiduciary Argument Against Stakeholder Theory," Business Ethics Quarterly, Cambridge University Press, vol. 13(01), pages 1-24, January.
    3. Maximilian J.B. Hall, 2009. "The sub-prime crisis, the credit crunch and bank “failure”: An assessment of the UK authorities' response," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 17(4), pages 427-452, November.
    4. Dalton, Dan R. & Daily, Catherine M., 2001. "Director Stock Compensation: An Invitation to a Conspicuous Conflict of Interests?," Business Ethics Quarterly, Cambridge University Press, vol. 11(01), pages 89-108, January.
    5. Craig Mackenzie, 2007. "Boards, Incentives and Corporate Social Responsibility: the case for a change of emphasis," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(5), pages 935-943, September.
    6. Freeman, R. Edward, 1994. "The Politics of Stakeholder Theory: Some Future Directions," Business Ethics Quarterly, Cambridge University Press, vol. 4(04), pages 409-421, October.
    7. Donaldson, Thomas, 2008. "Hedge Fund Ethics," Business Ethics Quarterly, Cambridge University Press, vol. 18(03), pages 405-416, July.
    8. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:kap:jbuset:v:146:y:2017:i:4:d:10.1007_s10551-016-3238-z is not listed on IDEAS
    2. Dulce Redín & Reyes Calderón & Ignacio Ferrero, 2014. "Exploring the Ethical Dimension of Hawala," Journal of Business Ethics, Springer, vol. 124(2), pages 327-337, October.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rug:rugwps:11/726. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nathalie Verhaeghe). General contact details of provider: http://edirc.repec.org/data/ferugbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.