Whiz kid investors are putting banks at risk

Bendigo and Adelaide Bank managing director Mike Hirst warned that the banking industry was too often putting their futures in the hands of young investment managers who fail to think about the long-term, Fairfax reported.

"You sit in front of these 26- and 27-year-olds earning half a million dollars and they're asking you questions, 'This is what's going to happen in the next three months - what are you going to do about it and what number do I plug into my spreadsheet," Mr Hirst said.

"There's no attention to what's the strategy or how long it takes to play out (or) what does it mean in terms of value to the organisation,'' he said.

''It's a frustration - I just sit there, take it, and hear what they've got to say and walk out shaking my head."

Mr Hirst said the way in which the market demands a return on equity rate of more than 20 per cent from their banks is unsustainable, and was part of the reason the global financial crisis was so damaging to the economy.

"If you think about the role banks place in the economy and how central it is to their success … why do you need that sort of return,'' he said.

"If you're demanding 20 per cent returns from something that is like that, then guess what, there's only one way you can get it. You take shorter term decisions and more risk and in the end it blows up in your face."

Bendigo often comes under fire from investors for its low-yielding Community Bank franchise. But Mr Hirst has long argued his form of business is designed to provide a longer-term benefit to the regional bank and the economy.

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