In an interview to appear on FOX Business Network’s Countdown to the Closing Bell (3 PM/ET), Barclays PLC (BCS) CEO Bob Diamond spoke with Liz Claman live from the World Economic Forum in Davos, Switzerland. Diamond expressed renewed confidence that the economy is recovering saying “I think we are past the worst of the crisis.” Diamond confessed “we need to cut the spending and cut the deficits” and in that sense “the U.K. and Europe are probably further ahead of the U.S.”
Here are the key highlights from the interview, courtesy of Fox Business Network:
On too big to fail:
“It’s very important that we allow banks to fail. It’s very important that no taxpayer money is ever again used to bailout banks that have failed. And that’s why we are working on how we can ensure that banks are able to fail and are able to be wound down.”
On whether he would ever accept a government bailout:
“No I think that’s exactly the plan we are working on. Is how do we create a capital structure, and how do we provide a resolution and recovery plan that is credible with our regulators so if the worst happened, they are comfortable that they can wind down the institution.”
On whether he is worried about the strength of the Euro:
“No, and I think we are past the worst of the crisis. The Eurozone will hang together.”
On the growth that needs to occur in the public sector:
“I think in particular the U.K. and Europe are probably further ahead of the U.S. in terms of focusing on the spending levels and the deficit levels. We know in Europe it was necessary because of the sovereign debt crisis.”
On his comments before U.K. treasury officials; “This time for banker’s remorse and self-flagellation should be over”:
“I think every bank, every banker has made mistakes. I include myself in that. But we are a strong bank. And you know I think the U.K. and Europe are a good example. They are focused on cutting spending, cutting debt, cutting deficits. That means very clearly that we’re not going to see any growth coming from the public sector. We shouldn’t. We need to cut the spending and cut the deficits and focus on that.”
On whether the Federal Reserve is in a position to consider tightening interest rates:
“I think it will happen eventually. We know that employment is a lagging indicator. The positive thing is that with the President and the Administration working more closely with business and with a very strong State of the Union address there’s more confidence. We feel strongly that the unemployment rate will fall probably to the mid eights by the end of this year and that there is confidence to hire and to expand business in the U.S.”
On feeling the effects of the recession and recently announcing they will lay off one thousand workers:
I think it’s more positive here than that. The integrated universal banking model, has served us so well during the crisis. Our strategy is in place. We’re focused on execution. Execution means we are delivering on our promises to our owners, to our employees, and most importantly to our customers and clients. And in the new world of new higher capital levels, we have to make sure that every single business we’re in is fit for purpose. You’re going to see banks like Barclays and others make moves to get fit for purpose.”
On the fines that U.K. regulators recently placed on the bank:
“There was no client money “lost” or “put at risk.” There were some procedural errors which we have corrected and we move on.”
On the increased regulation in the banking industry:
“It’s good and bad. The positive is the financial system did need to be safer and sounder. Basel has come up with capital regulations, capital levels which are consistent in the G-20. We’ve never had that before and you know that I felt very strongly that consistency amongst the G-20, a level playing field, is important going forward. On the other hand, it would be nice to have final certainty. There’s still some things around resolution and recovery. Around capital buffers that have not yet been decided and it would be nice if we could get things behind us and move on.”
On the restructuring bankers pay to the “coco” compensation model:
“We have made no decisions but reports that we’re looking at this are true. We’re working with regulators to design a portion of compensation in contingent capital. We think it’s terrific in lining up the interests of the employees, the shareholders and the regulators and it’s something that we do hope we can do. But no final decisions are made and some kind of regulatory approvals and structuring still to do, but we think it would be a very positive move for all parties.”
