Barclays' boss says banks should not be bailed out
- 11 January 2011
- From the section Business
Barclays boss Bob Diamond has said that taxpayers should not bail out banks, and that those banks that get into trouble should be allowed to fail.
"It is not OK for taxpayers to bail out banks," Mr Diamond told a Treasury Committee hearing.
On bonuses, he said that Barclays "paid for performance, not for failure".
The government has called on banks to pay smaller bonuses, with Deputy Prime Minister Nick Clegg urging them to be "sensitive to the public mood".
Mr Diamond said that Barclays had yet to decide on bonus payments to its staff for this year.
He added that the "majority" of the amount paid in bonuses went to investment bankers, rather than staff in the retail banking arm.
"We are sensitive, we are listening [to calls for restraint], and there is no lack of effort in recognising the importance of this issue and being responsible [over bonuses]," he said.
He said that Barclays had "no intention of paying more in bonuses than is necessary".
However, he said the bank had to balance these responsibilities with "the environment we operate in", referring to the fact that if Barclays were to unilaterally reduce bonuses, top staff could leave to join competitors.
He said he had waived his bonus for the past two years but would wait until he was offered one this year before deciding whether to accept it.
While he said he was grateful for the support given to the banking sector from central banks and governments, he stressed that Barclays had not taken any direct support from the taxpayer.
The UK government has pumped billions of pounds into the banking sector and has bailed out both Royal Bank of Scotland and Lloyds Banking Group, while the Bank of England has also injected billions into the economy through its quantitative easing programme.
"No bank should be a burden on the taxpayer - we have to make the system safer," he said.
Mr Diamond also said that his bank was committed to lending more to help the economic recovery in the UK, and that it was time to move on from widespread bank-bashing.
"There was a period of remorse and apology for banks - I think that period needs to be over," he said.
"We need our banks willing to take risks, be confident and work with the private sector in the UK, so that we can create jobs to improve economic growth."
However, when pressed he would not give an idea of how much Barclays intended to lend this year.
"In 2009, we lent £35bn more [than the previous year] and in 2010 we lent £35bn more again in the first nine months alone," he said.
"Lending is what we do. We like to lend."
But he said the bank needed to lend responsibly, with proper risk management in place. Lending too freely had contributed to the financial crisis, he added.
Banks are under pressure from the coalition government to lend more to businesses to help them through the downturn.
Mr Diamond said the major banks were in discussions with the government about lending targets for next year.
He also reiterated Barclays' intention to remain based in London. He said the city had numerous benefits, including the time zone, a good pool of talent and the fact that English was the native language.
There has been speculation that some banks may move abroad if the government clamps down on bonus payments.