Barclays raises the ante in bank reforms row

Barclays cranked up the pressure on the Independent Commission on Banking (ICB) yesterday to change its mind about recommending firewalls between retail and investment banking businesses ahead of its final report.

Chris Lucas, group finance director, told a City conference the ICB’s initial recommendations last spring to ring-fence the high street from the “casino” banking arms to shield the taxpayer from further banking bailouts was not Barclays’ preferred model.

He told the conference organised by Japanese investment bank Nomura: “Whilst we recognise the need for a safer financial system, ring-fencing is not our first choice, but we are confident that a pragmatic set of workabale requirements will emerge which we will be able to manage.”

Lucas’s comments to the City audience mirrored the view expressed by Bob Diamond, Barclays’s chief executive, to the Treasury select committee earlier this year, and come as the debate about firewalls has hotted up this week.

The director-general of the Confederation of British Industry, John Cridland, said on Tuesday that the ICB would be “barking mad” to press ahead with ring-fencing when the banking sector needed all the help it could get to lend to British industry in the extended downturn.

That prompted Business Secretary Vince Cable to hit out at the “special pleading” of banks for the commission, chaired by Sir John Vickers, to water down its final recommendations. Cable branded the banks’ protests as “semi‑hysterical”.

The ICB will publish its final report on 12 September, as banks led by Barclays and Royal Bank of Scotland claim firewalls would hobble banks with more onerous capital requirements.