Taxpayers should never have to bear the burden when a bank lands in trouble, the new head of Barclays Plc told MPs today.
In a packed room which people had to queue to enter, Bob Diamond answered questions from The British parliament's Treasury Select Committee, a cross-party group of politicians assessing competition among banks, about pay and bonuses for bankers.
"No bank should ever be a burden on the taxpayer," said Mr Diamond, who became Barclays chief executive this year after running the investment banking arm Barclays Capital for 14 years.
In sometimes heated exchanges, pay was the expected hot topic, amid public anger at bank bonuses likely to total about £7 billion pounds in coming weeks.
Mr Diamond defended the universal banking model that combines retail and investment banking, saying it was a "great starting position" and provided more stability.
The government is not expected to clamp down too hard on pay at the banks after a series of meetings, but instead seek commitments from them to lend to small businesses.
But Mr Diamond - who said he was "extremely grateful" for support for the sector from regulators and central banks during the height of the crisis - said the bank could not decide how much to lend without making credit quality checks.
Demand for loans had also subsided, he said.
The row about irresponsible pay flared up in the UK again, after a weekend report that Stephen Hester, chief executive of majority state-owned Royal Bank of Scotland, was set for a €2.5 million bonus.
Mr Diamond is one of the highest paid European executives. He earned £21 million in 2007, but waived his bonus for the last two years, prompting some politicians to slam his promotion as rewarding "casino banking."
But the new boss may opt to shrink his investment bank and other parts of Barclays with a radical shake up next month to ditch low-return assets, analysts at UBS said this week.
Reuters