Chris Blackhurst: Why is bad behaviour by bankers just another risk?

How low can banking get?

The reason I ask is that so consistently bad has the behaviour of bankers been that regulators are now factoring it in as a risk — the same as credit or market risks.

So far, they’ve had stress tests designed to probe the efficacy of banks when faced with an economic or systemic crash. But that’s not enough, apparently.

The European Banking Authority wants to change the rules for next year’s tests to include “conduct risk” — fines and financial settlements for past or future misconduct.

It’s overdue. Research from Morgan Stanley shows that since 2009, the major US and European banks have paid $260 billion (£172 billion) in legal penalties.

And that eye-watering figure is rising. Hardly a day goes by without news of yet another transgression and negotiation with the authorities.

The banks may be getting their act together in other areas so they’re much more careful with their credit, resulting in a drop in loan defaults.

But when it comes to their own misdeeds, the bill keeps climbing.

Fines and legal settlements account for 7.5% of the average bank’s operating costs.

Still, they strut around as though oblivious and impervious. Still, they award themselves big bonuses. Still, the shareholders do nothing.

Imagine if this was any other industry and $260 billion had been shelled out. What would investors be saying? In fact, what would their lending banks be doing?

They’d be ordering the miscreants to shape up, sending in consultants to sort them out, demanding top-level changes in attitude and management.

I know it’s been said before but, where the banks are concerned, you can’t make it up.