Barclays Bank chief defiant about bonuses

Banks should stop apologising for mistakes made during the financial crisis, Barclays’ new head told MPs today (Tuesday January 11), striking a sometimes defiant tone in a grilling over bonuses.

In a crammed room which spectators had to queue to enter, US born 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 a members of the Treasury Select Committee.

In sometimes heated exchanges with 12 MPs from the Committee, pay was the hot topic as expected amid a political spat over British bank bonuses likely to total about £7 billion.

The government is not expected to clamp down too hard on banker pay after a series of meetings with lenders, but instead will seek commitments from them to lend to small businesses and kick start the economy.

But 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 after a weekend report that Stephen Hester, chief executive officer of majority state owned Royal Bank of Scotland, was set for a £2.5 million pound.

Diamond, who earned £21 million in 2007 but has waived his bonus for the last two years, said he would show any restraint he could in his remuneration policy. But asked whether he would again waive his bonus this year, Diamond told the cross party group of politicians he would decide with his family whether to accept a bonus if he was awarded one.

A spokesman for Prime Minister David Cameron, asked whether the government had thrown in the towel on bank bonuses, said that wasn't the case. Discussions with the banks were proceeding, he said at a media briefing.

Diamond said taxpayers should never have to bear the burden when a bank lands in trouble, reflecting global efforts to inflict more pain on bondholders in case a bank lands in trouble and not bail them out with taxpayer money.

Diamond, who became Barclays chief executive this year after running its investment bank for 14 years, also defended the universal banking model that combines retail and investment banking and which is under pressure internationally from financial regulators, saying it provided more stability.