Diamond joins chorus calling for reform delay

BARCLAYS chief executive Bob Diamond turned up the heat on George Osborne to delay implementation of the banking reforms in a top‑level private meeting with the Chancellor yesterday.

It is understood Diamond told Osborne that he saw no form of firewall between retail and investment banking that would not have some negative impact on lending to businesses and individuals.

Such a split was one of the main recommendations of the interim report of Sir John Vickers’ Independent Commission on Banking (ICB) last spring.

It is thought Diamond, formerly head of the bank’s investment banking division, told the Chancellor the timing for such a major regulatory change was poor given the need for banks to lend to businesses in Britain’s fragile recovery.

This was Diamond’s public position at the bank’s interim results last month when he said ringfencing would not be his choice, but that the bank could live with it.

The banking commission is due to produce its final recommendations on 12 September, and yesterday’s meeting comes after a week of sharp crossfire on the subject of ringfencing.

John Cridland, director general of the CBI, said that it would be “barking mad” to introduce ringfencing that would increase the capital banks had to hold at such a critical juncture for the fragile British economy.

Business Secretary Vince Cable, the most zealous member of the cabinet for early banking reforms, hit back at what he called the “special pleading” of the banking industry in trying to ward off ringfencing designed to prevent further taxpayer bail-outs of the sector.

A Barclays spokesman said yesterday: “We do not comment on meetings which may or may not take place with government ministers.”

A Treasury spokesman was not available for comment.

It is understood that Royal Bank of Scotland boss Stephen Hester, who has also spoken of the possible “unforeseen consequences” of ringfencing, has not been involved in any 11th‑hour lobbying on the issue.