Home / Regulation / Not just a banker, but a Diamond geezer

Not just a banker, but a Diamond geezer

So we start the year as we mean to go on, with a bunch of MPs grilling a banker about bonuses, bailouts, lending and such like.

Banker bashing 2011: same sheet, different day.

This time it’s the turn of Bob Diamond, Chief Executive of Barclays Bank, to take the heat in front of the Treasury Select Committee (TSC).

And yes, he can take the heat, as he’s sitting on a personal fortune estimated at over £100 million with an £8 million bonus this year.

So go on, take a punch …

… and the Committee did.

Following the meeting live on the Parliamentary website, supplemented by tweets from journalists Robert Peston and Ian Fraser, along with the blog of the Financial Times, made for a fun morning’s viewing.

The Committee is led by recent FSClub keynote Andrew Tyrie, who began by pressing for an answer to the question of whether shareholders get to see the bonus allocations before they are allocated.

“So the shareholders don’t know what you’ll be paying and the structure of the bonus scheme you will announce?” asked Tyrie, to which Diamond soft shoe shuffled.

An hour later and the subject bounded back again thanks to John Mann, Labour’s EveryMann, who started talking about how it would be easier to get a camel through the eye of a needle than a rich banker to get through the gates of heaven.

No wonder Bob responded: “You’re not a big fan of Barclays are you?” to which Mann said: “I’m a big fan of getting answers from you.”

He was then, in the words of Robert Peston, “filleted” by fellow TSC member George Mudie who pursued a line of questioning around why banks need to pay such massive bonuses to already well remunerated people when no other industry does this.

Mr. Diamond put it down to the nature of competition in banking … a weak answer as it has so often been made clear that there is no competition in banking except amongst incumbents who are protected by licences.

Maybe a better answer, when challenged with whether he recognised the bonus issues as being “toxic in the real world”, was:

“We are sensitive, we are listening, and one of the reasons I was looking forward to today was to have an opportunity to put some balance and some understanding….we’ve done a very poor job over the years in explaining how the compensation process is integrated in the other aspects…how investment banks contribute to society…and I certainly pledge to do more in that regard.”

Or maybe not.

Nevertheless, a key point was made that if the UK clamped odwn hard on bonuses, then banks could easily relocated – having acquired Lehmans US operations, Barclays Capital could easily place staff into that office – and this would have the consequent effect of UK taxes being gifted to the US treasury.

As Mr. Diamond intimated – or was that threatened? – “Why would the United Kingdom not be proud to have one of the world’s best investment banks located here?”

Hmmmm … another line of questioning I found intriguing came from Chuka Umunna, a smart young labout MP, who asked about Barclays tax avoidance practices.

He began by asking how many Barclays subsidiaries are incorporated in the Isle of Man?

Mr. Diamond didn’t know.

Mr. Umunna did. There are 30.

He then asked about Jersey.

“The number is 38,” says Chuka.

Cayman Islands – 181.

Chuka made it clear that “these are well known tax havens…a cursory reading of your group returns suggests you have over 300 companies operating in tax jurisdictions around the world.”

Mr. Diamond came back with: “I can assure you the bank is not evading taxes” and, as Mr. Umunna responded, he wasn’t asking about evasion which is illegal, he was asking about avoidance on a “grand scale” but (just) legal.

There were a number of other exchanges about bailouts, competition and the ethics of banking, with qauite a few intriguing and amusing comments:

Bob Diamond on the perceived invincibility of banks:

“Banks should be allowed to fail…It’s not okay for taxpayers to have to bail out banks.”

On steering Barclays through the storm:

"Let me be clear. Being Barclays or being HSBC in this country, where a number of banks did fail, there is little differentiation between banks that failed and those that didn't… We are very very proud that we managed through this period, profitably… and with the interests of our clients."

On reintroducing the principle of unlimited liability:

"Take Bob Diamond out it. You own two big banks. Would you be able to attract the calibre of Stephen Hester (RBS chief) and Antonio (Horta-Osorio – incoming Lloyds chief) with unlimited liability? I can't think of a single nationally directed institution that didn't end in tears, it is not the natural place to be."

The MPs on Bob Diamond:

"This is very nice, but it's not getting to the point. I've got tears pouring down my cheeks… I can hear the bloody bagpipes going." – George Mudie, Labour MP for Leeds East's response to Bob Diamonds violin-inspired speech about emigrating to Massachusetts from Scotland and Ireland; He told the Committee that as one of nine children, if he wanted a new bike, he knew he would have to save for it himself.

Andrew Tyrie, Conservative MP for Chichester and committee chairman, described Barclays shareholders as “interested, clever, uninformed” and "half-asleep", as Diamond told the committee that shareholders had never asked for information on bonuses.

"Over Christmas I read my seven year old The Emperor's New Clothes…. before taking apart his arguments on competition, on the threat that banks will leave… there is no evidence that banks will move. It's extremely disappointing, you are in denial about the taxpayers' support for you; denying a lack of competition in the industry; you're denying customer satisfaction; you're denying the lack of support for small businesses… the Emperor is wearing no clothes." – Andrea Leadsom, Conservative MP for South Northamptonshire.

"Why is it easier for a man to pass through the eye of a needle than a rich man to pass into the Kingdom of Heaven?" – John Mann, Labour MP for Bassetlaw, applies the well-known Biblical saying after Diamond’s vague replies on bonus, saying it’s a matter for the board.

Anyways, the one quote that remained with me throughout the whole grilling was this one from Bob Diamond: “There was a period of remorse and apology for banks, that period needs to be over.”

In other words, time to move on.

I think that was wishing on a star however.


If you’re seriously interested, here are all the top entries on this story:

And a few news reports too:



About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

Check Also

Who owns the customers’ data?

Following on from the discussions about identity on Monday, it gets interesting to think about …

  • Erik Bogaerts

    There is a positive side to this. Think about it, without people like Bob, we wouldn’t have the great financial thrillers from Linda Davies, Stephen Fry (not the comic), Christopher Reich, Michael Ridpath, etc.