Barclays chief Diamond says Irish banks didn't 'diversify'
Published 12/01/2011 | 05:00
Irish banks might not have collapsed if they had done more than just ordinary retail banking, one of Europe's most senior bankers has said.
Bob Diamond, Barclays chief executive, said a lack of "diversity'' in their earnings was one of the key reasons Irish banks got into trouble.
He was speaking yesterday in the House of Commons and talking about the issue of splitting retail banks from riskier investment banks.
Mr Diamond, famous for buying the US operations of Lehman Brothers during the financial crisis, is one of the most influential bankers in the UK and Europe and has strongly objected to descriptions of investment banking as "casino banking''.
While Irish banks had other operations outside of lending, such as treasury, stockbroking and asset management, the vast majority of their funding came from lending and ordinary transaction banking.
Analysts yesterday said they disagreed with Mr Diamond's comments, pointing out that AIB was one of the most diversified of the Irish banks, with a strong geographical spread to its operations.
Mr Diamond said yesterday that banks should stop apologising for the mistakes which helped cause the financial crisis.
He declined to say if he would again waive his bonus and would not say how much Barclays would lend to businesses.
"There was a period of remorse and apology for banks and I think that period needs to be over. We need our banks willing to take risks . . . so we can create jobs," Mr Diamond told the cross-party Treasury Select Committee.
Pay was the hot topic as expected. Britain is heading toward a "car crash" on the issue, according to Jesse Norman, a Conservative MP and member of the committee, who said the public resents seeing a UK bank bonus pool expected to reach £7bn (€8.4bn) for 2010.
The UK government is struggling to clamp down on banker pay, although Finance Minister George Osborne said he was still seeking a settlement with banks to boost business lending and increase pay transparency, warning that all options were on the table if those talks failed.
"The British people and this government will not accept extravagant bonuses this year without a change in behaviour," Mr Osborne said.
Mr Diamond, who became CEO at the start of the year after running Barclays' investment bank for 14 years, said he was committed "to be responsible and to provide any restraint I can" on pay, but repeatedly said he had to compete against rivals such as Credit Suisse and Goldman Sachs in retaining key staff.