Quit apologising for financial crisis, Barclay’s boss tells banking industry

BANKS should stop apologising for the mistakes which helped cause the financial crisis, Barclays new boss told British politicians, striking a defiant tone in a grilling over bonuses yesterday.

In a crammed room, American Bob Diamond — one of Europe’s highest-paid executives — 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,” Diamond told the cross-party Treasury Select Committee during questioning.

Pay was the hot topic as expected. Britain is heading towards 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 British bank bonus pool expected to reach £7 billion (€8bn) for 2010.

The 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,” Osborne said.

Diamond, who became chief executive at the start of the year after running its investment bank for 14 years, said he was committed “to be responsible and to provide any restraint I can” on pay, but said he had to compete against rivals such as Credit Suisse and Goldman Sachs in retaining key staff. He said there had been no decisions on bonuses or the level of likely lending to businesses in the coming year. Barclays shares rose 5.5% to 292p, their highest in two months, after positive comments by analysts at Bank of America Merrill Lynch, dealers said. The European bank sector was up 1.9%. The row about irresponsible pay flared again in Britain after a weekend report that Stephen Hester, chief executive of majority state-owned Royal Bank of Scotland, was set for a £2.5m bonus. The government said yesterday it had no power to restrict payouts at RBS this year.

Asked if he would waive his bonus this year, Diamond, who earned £21m (€25) in 2007 but has waived his bonus for the last two years, said he would decide “with his family” whether to accept a bonus if he was awarded one.

Diamond, 59, said taxpayers should never bear the burden when a bank lands in trouble, reflecting global efforts to inflict more pain on bondholders in case a bank hits problems and not bail them out with taxpayer money. But in one heated exchange he refused to say he was grateful for taxpayer support during the financial crisis, instead acknowledging help from regulators and central banks.