Big bonuses here to stay, warns Barclays chief Bob Diamond

Barclays chief executive Bob Diamond today pledged to show restraint over banker pay, but told MPs big bonuses were here to stay if the sector was to succeed.

The multi-millionaire banker, who took on the top job at Barclays on January 1, said the time for "remorse and apology" needed to be over to allow banks to support Britain's recovery.



In a hostile grilling by the cross-party Treasury Select Committee, Mr Diamond committed to being responsible in setting bonuses and would not pay more than was necessary.



However, he refused to be drawn on the bank's plans for this year's bonus round or his own windfall as he said the pot had not yet been set.



Mr Diamond is expected to be offered around £8 million for 2010 performance, having waived his bonus for the last two years.



John Mann, Labour MP for Bassetlaw, asked if he would forgo his bonus again this year.



Mr Diamond batted away the question, saying: "I've not been awarded a bonus yet. I'll make that decision with my family, as I did last year."



The bank's new boss was being quizzed by the Commons committee during its hearing into competition and choice in British banking.



Britain's banks are in the process of totting up their bonus pots before full-year results are published, with bank pay also in the spotlight amid speculation the Government has caved into the City on the issue of bonuses.



Mr Diamond surprised MPs when he said that the Prime Minister and Chancellor had not asked him face-to-face to limit his bonus.



The 59-year-old - once described as the "unacceptable face of banking" by Lord Mandelson - said he had also not been pressed by the former government when deciding to forgo his handout in 2009 and 2010.



However, he said the debate needed to move on.



"Frankly, the biggest issue is how do we put some of the blame game behind us?"



He added: "There was a period of remorse and apology for banks - that period needs to be over. We need banks to be able to take risk, working with the private sector in the UK."



As the debate became increasingly heated, David Ruffley, Tory MP for Bury St Edmunds, questioned Mr Diamond over a Bank of England assertion that because Barclays is too big to fail it is more credit-worthy and can therefore borrow more cheaply.



Mr Ruffley demanded: "Are you grateful to the British taxpayer for subsidising you in this way?"



Mr Diamond said he was "very grateful" to governments around the world for the action they took.



Mr Ruffley then stepped up pressure on Mr Diamond to put a figure on how much Barclays would lend to small and medium-sized enterprises this year, but Mr Diamond said the figure was not yet decided.



Despite a bruising exchange over bonuses, the bank chief stuck to his guns that while he would show restraint on pay, it was a necessary evil in ensuring UK banks prosper.



His message was that Barclays was a bank to be proud of and the group wanted to help drive UK economic growth. It would retain its headquarters in London, he added.



"The system needs to be safer and sounder in terms of how compensation works, but it's in the interests of everyone in the country that we shift growth to the private sector.



"I don't agree that I can isolate bonuses and assume that would have no consequences on the rest of the business."



Discussing risk-taking in the bank sector, Mr Diamond said banks should be "allowed to fail" and it was not acceptable to take bail-outs from the taxpayer.



Mr Diamond said Barclays was not "too big to fail" and was working on plans and procedures for recovery if it was to get into trouble.



The issue of competition in the banking sector was sidelined at the hearing as bonuses took centre stage.



However, Mr Diamond was asked about his stance on separating retail, or high street banking, from riskier investment banking - sometimes dubbed casino banking.



"The financial model is stronger as a result of the integrated business model," Mr Diamond replied. "It gives us a greater capacity for lending."



Mr Diamond was seen as a controversial choice to succeed former Barclays chief executive John Varley, having amassed one of the biggest banking fortunes in the world during his time in charge of investment banking arm Barclays Capital.



It is thought this year's bonus will be reined in to reflect his new role, but he is still entitled to a potential package worth £11.4 million, including a basic salary of £1.35 million.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consulant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

Guru Careers: Financial Controller

£45 - £55k DOE: Guru Careers: A Financial Controller is required to join a suc...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£12500 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Day In a Page

Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Attwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'