- Former Barclays CEO Bob Diamond thinks the post-financial crisis environment has led to banks taking too few risks.
- “If they are totally without risk, they are not helping create jobs and economic growth,” Diamond said in an interview with the BBC.
- Diamond was once labelled the “unacceptable face of banking” by Labour minister Peter Mandelson.
With the 10-year anniversary of the collapse of Lehman Brothers just two days away, many key figures from the financial crisis have taken the opportunity in recent days to reflect on their part in it.
Most have spoken of their regrets from the time, but largely struck a positive tone on the changes to the financial system that have occurred since then to make the world safer.
Former Barclays CEO Bob Diamond has struck a slightly different tone, however. He said in an interview on Thursday that banks need to be taking more risks today, not fewer.
“If they are totally without risk, they are not helping create jobs and economic growth,” Diamond said in an interview with the BBC.
“The culture of banking now is that if anyone makes a mistake they get fined – or the bank is in trouble.”
Diamond, was head of Barclays Capital arm during the crisis, before becoming its CEO in 2011. During his time at the bank,Labour party grandee Peter Mandelson famously labelled him the “unacceptable face of banking.”
He left Barclays in 2012 amid the LIBOR rigging scandal and is now involved with Atlas Mara, a financial services firm focused on Africa, which he cofounded in 2013.
Diamond told the BBC that all banks should not be lumped together when it comes to assessing the crisis. British lenders like Barclays and HSBC should not be compared to those that needed government aid like Lloyds and RBS.
“I think HSBC and Barclays deserve credit for raising capital privately,” he said. “People should be angry with RBS for failing in the way it did – ten years later people still haven’t got their money back. Private investors who put money into Barclays have seen very good returns.”
In need of funding during the crisis, Barclays turned to the wealthy middle eastern state of Qatar to secure a £12 billion ($US15.6 billion) package. The deal was investigated by the UK’s Serious Fraud Office (SFO) after it emerged that Barclays provided a $US3 billion loan to the state of Qatar in the same year. Charges of conspiracy to commit fraud were brought against the bank but thrown out earlier this year.
One of the biggest retrospective criticisms of financial institutions in the run-up to the crisis is that they had cultures that placed profits above anything else. Diamond has always denied that this was the case at Barclays, and used his BBC interview to reiterate that.
“I don’t think the reprehensible behaviour of a few people out of 160,000 employees is representative of the culture we had at Barclays. I think we had a very strong culture,” he said.
Diamond also defended himself and Barclays from accusations during the crisis that they were involved in “casino banking” – the now infamous charge levied by Liberal Democrat leader Vince Cable in 2010 during his time as business secretary.
“Labels like casino banking are very pejorative and very unhelpful and don’t describe the reality. Vince Cable was wrong,” Diamond told the BBC.
“We have asset managers managing pension funds who need access to liquidity. We have companies hedging their foreign exchange exposure. Sit on a trading floor and you’ll see the real value this brings to the economy.”
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