U.K.'s Cable Says Diamond Appointment Raises `Dilemma' on Bank Structure
The appointment of Robert Diamond as Barclays Plc’s chief executive officer raises questions about the structure of U.K. banks, according to Business Secretary Vince Cable.
“The appointment of Mr. Diamond, who comes from the investment banking arm of the business, does illustrate in a very graphic way the dilemma about having very large banks underwritten by the taxpayer which rest in a substantial part on what the Bank of England governor calls ‘casino banking,’” Cable told reporters in London, a day after it was announced Diamond would replace John Varley as CEO next year.
“We are worried about this combination of casinos and traditional banking and the banking commission will be coming up with some strong conclusions on that,” Cable told the BBC’s Today Programme earlier.
Britain’s coalition government has appointed a commission to examine whether U.K. banks’ investment and consumer units should be split. It reports next year. Diamond, 59, has run Barclays Capital for the last 13 years.
Cable’s Liberal Democrat colleague Matthew Oakeshott yesterday described Diamond as a “very good gambler” who “should not be running a world-class bank.” Oakeshott, who speaks for his party on financial affairs, was expressing personal views and not those of the coalition, a Treasury spokesman said.
“We still have a problem that our major banks are underpinned by the British taxpayer, they are potentially a risk and we have to make them safe,” Cable said.
‘Made Safe’
“This commission that we’ve set up is going to have to find a way of ensuring that kind of structure is made safe, whether by breaking up in a crude way or more subtle ways of dealing with it,” he said. “Splitting the banks can mean different things.”
Barclays spokesman Richard Treadwell declined to comment.
The bank fell 3.2 percent to 304 pence at 11:40 a.m. in London, the biggest decline in the five-member FTSE 350 Index of U.K. banks.
Cable questioned whether Diamond’s appointment was designed to send a message to the government.
“I suspect appointing chief executives of banks rests on a deeper analysis than how to thumb their noses at government,” he said.
To contact the reporter responsible for this story: Thomas Penny in London at tpenny@bloomberg.net; Jon Menon in London at jmenon1@bloomberg.net
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