BARCLAYS president Bob Diamond yesterday said no bank should ever again have to fall back on the taxpayer for a bailout, as he argued that the future stability of the banking system lies in the successful implementation of “living wills”.
“Strong banks want strong regulation,” Diamond said, referring to the raft of regulatory changes currently battering the banking sector. “We certainly don’t want a repeat of the crisis and no bank should ever take taxpayer money.”
Diamond reiterated Barclays’ firm opposition to politicians’ proposals to mitigate risk in the financial system by splitting up banks’ investment and retail operations, adding: “The key to managing systemic risk lies in resolution plans… Large banks like Barclays, HSBC and Standard Chartered have to compete against the likes of JP Morgan and Bank of America, Santander in Spain, Deutsche Bank in Germany and BNP Paribas in France – and we see no sign of authorities around the world moving to change the structure of those institutions.”
Bank of England deputy governor Paul Tucker agreed, telling delegates at the CBI’s annual conference that the “bedrock of trust” for banks was for customers to understand both that their money is safe and that banks will be allowed to fail in the future in an “orderly fashion”.
Diamond said he “applauded” the UK government for the tough decisions it has taken to bring the deficit under control and said he recognised banks’ “obligation” to support growth, but warned that placing an excessive tax burden on the sector could hamper its ability to lend to smaller businesses. On bank lending to small and medium-sized enterprises, which has come under the spotlight as smaller businesses struggle to gain access to finance, Diamond said banks are still lending but that they also have a duty to approve loans responsibly.