Hunters Race/UnsplashHarrison Young has had a long and distinguished international career in banking and finance. He started in senior executive roles in major United States banks, then became a US financial regulator, with responsibility for the resolution of failing banks. He was also a director of the Commonwealth Bank of Australia for ten years, and was on the court of directors of the Bank of England. His book, Prudence and Ambition, is part autobiography, part guidebook for those contemplating a career in banking. It cleverly weaves narrative about the author’s long, distinguished banking and finance career with insights about bank management and governance. Young is exceptionally well placed to provide insights into important issues in banking – and it shows.Review: Prudence and Ambition, by Harrison Young (Ventura)Young, who was born and educated in the US, now lives in Melbourne, Australia. He “stumbled into” banking, following five years in the US Army (where he describes everyone reading shared copies of Catch-22) and a brief stint as a Washington Post reporter. Someone told him big banks in Manhattan “would hire anyone who looked plausible, and would teach you to do whatever it was that bankers did”. So he bought a suit.His first banking job was at Citibank (then First National City Bank), in 1971, rising to become an assistant vice president. In 1975, finding commercial banking “frustratingly tame”, he joined Morgan Stanley, investment banker for 15 of the 20 largest industrial corporations in the world, he writes – and for many governments and their agencies. This was followed by a stint in Washington, regulating banks, at the Federal Deposit Insurance Commission (FDIC), before he returned to “the Firm” (Morgan Stanley) in 1994, aged 49 – partly because he had learned Mandarin in the army.He was lured by the promise of living in Beijing, where the company had proposed the creation of China’s first investment banking firm, China International Capital Corporation: 35% owned by Morgan Stanley, 50% (in total) by two Chinese government entities. Commuting between Hong Kong and Beijing at first, he became the first foreigner approved by the People’s Bank of China as a senior officer of a Chinese financial institution. After two years, he became vice chairman of Morgan Stanley Asia, and later, chairman of Morgan Stanley Australia. From 2007 to 2017, he was a non-executive director of Commonwealth Bank of Australia, where he was chairman of its risk committee. He also had a stint as chairman of The Conversation.As the Australian Financial review recently reported, he believes banking boards have gotten too big, and need more banking experience – and too many board chairs remain too close to their CEOs.Explaining banking – from investment to riskBanking is a complicated industry, partly due to its special role in the economy. This leads to significant government and regulatory oversight. While many bankers complain about “over-regulation”, Young highlights the importance of appropriate regulation in creating an environment favourable to bank operations and safety. Banking also appears complicated because many of its activities are complex. Those in the industry are not always inclined to provide easily understandable explanations – but Young provides a service to readers by removing the “mystique”. He explains why investment banking firms are not banks (a bank needs to have deposits), what deposits are (to a bank, funding; to most of us, assets), the delicate balance of risk culture within a bank, things like the ideal composition of boards and ten insights into risk.I particularly liked his explanation of bank capital and its regulation. He emphasises that banks do not “hold” capital – even though this is a term widely used, even by bank regulators. Capital is, he explains, “a statistic, a difference, the value of a bank’s assets minus the value of its liabilities.”That difference (hopefully) provides comfort to depositors and other creditors that the bank will be able to honour its obligations, even in the event of an unexpected fall in the value of its assets. For example, The US Savings and Loan crisis of the late 1980s, when over 1,000 thrift institutions failed, costing taxpayers around US$130 billion in deposit insurance payments. Their uninsured customers lost money.“Survival means managing things that cannot be measured, and being prepared for an unknowable future,” Young writes, explaining why banking is “harder than it looks”. The key challenge, he says, is maintaining balance – “taking risk, but not too much”.He writes: “Any risk culture worth its name wages permanent war on overconfidence.” But: “A strong risk culture dislikes timidity. Up and down the organisational chart, fearful people are dangerous.”His discussion of risk and its management is welcome. Whether that justifies the extraordinarily high remuneration of senior executives of successful banks, such as the just shy of A$30 million paid to the Macquarie Bank CEO in 2025–26, is open for debate. Young provides valuable insights for thinking about that question. “High-end bankers get paid what they do because their firms are able to charge what they do,” he writes. “Clients are willing to pay those fees because they need the skill and risk absorption those firms can deliver.”“Paying bankers the right amount, spun in the right way – in short, making them feel they’ve been fairly treated – is one of the key challenges of high-end banking’s business model,” he continues. “Banks must simultaneously persuade their most valuable employees that they are getting paid enough and persuade the institution’s other stakeholders – owners, regulators, the general public – that they are not getting too much.”Entertaining and informativeBanking is not, or should not be, a dry textbook subject just about finance and economics concepts – though understanding the technicalities is important. Young highlights, with often amusing examples, the importance of relationships between individuals, both within and across financial institutions – and between institutions themselves.This exchange, as he prepares to go to China, is one example.“They like the idea that you are part Chinese,” a wise English friend told me. “When you go to Beijing, they will like the idea that you are a government agent.”“I am not a spy,” I said firmly. “And I’m not going to pretend I’m part Chinese.”“Of course not,” he said. I waited for him to go on. He waited for me to understand his point.He also provides interesting and useful discussion about the “styles” historically adopted by different banks, which condition the working environment. For example, a focus on short-term profits – possibly at the customer’s expense – versus maintaining long-term customer relationships.An aspiring bank director might find his discussion of many complex banking activities (such as the stripping of bond cash flows into IOs – interest only – and POs – principal only) too short. To fully grasp the issues involved, they’d need to read more widely. This should not be taken as a criticism of the book, which identifies many important areas of needed knowledge.Its autobiographical aspect is also very welcome. Young provides readers with insights into major events in financial history after the second world war. These include major bank failures, like Bank Herstatt (a private German bank that went bankrupt in 1974), resolution processes for failed banks (such as in the US Savings and Loans crisis), and the global financial crisis of 2008. The book is also useful for its insights into both investment and commercial banking management. Young skilfully weaves illustrations of his lifetime journey through the financial sector, with valuable lessons he has learned from that journey. It is an entertaining and informative read.Kevin Davis does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.