Vince Cable fears over investment ties to retail banks

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Indy Politics

The appointment of high-flying investment banker Bob Diamond as the next head of Barclays illustrates the policy dilemma of the combination of "casinos and traditional banks", Business Secretary Vince Cable said today.

Mr Cable was careful not to criticise directly the appointment of the multi-millionaire head of Barclays Capital to be the overall group's chief executive.

But he used the announcement of Mr Diamond's new role to press home his view of the dangers posed by High Street banks having speculative investment arms attached to them.

He told the BBC Radio 4 Today programme: "It isn't my job to appoint the head of a private bank.

"But what this appointment illustrates is the wider policy question about how banks can be made safe, and we are worried about this combination of the casinos and the traditional banks."

Mr Cable went on: "I think it does illustrate the wisdom of the Government's decision to set up this banking commission to look at the structure of banks."

The commission will report in several months' time and could recommend splitting retail and investment banks.

The Business Secretary said: "The whole point about that work is the Government's worry about the future stability of banks where you have this combination of traditional banking being tied up with investment banks, what people have called 'casinos'.

"Mr Diamond illustrates in a particularly graphic way where you have an extremely high-paid head of an investment bank taking over one of these retail banks."