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Page last updated at 10:06 GMT, Friday, 4 November 2011

John Humphrys and Bob Diamond

Barclays chief executive Bob Diamond has said that bankers "can be cuddly" and that 'too big to fail' should be struck from the economic lexicon.

In his first in-depth broadcast interview since taking over Barclays, Mr Diamond was pressed by John Humphrys on executive pay, regulation of the financial sector, on whether banks are gambling with the economy and what a bank's role in society should be.

Read key quotes from the interview below.


"We need the belief that banks can fail without creating systemic risk. I think if we could remove the phrase "too big to fail" from our lexicon, if we really believe that banks could fail without creating unwanted systemic risk, we would feel better."

"One of the things the regulators are working on, and we believe passionately about this, is that we need a regulatory environment where if a bank has a problem, the regulators are able to resolve that problem to bring the bank to a resolution of the problems or allow it to fail, without creating systemic risk and without creating hardship on the taxpayers or the consumers.

"I believe we can get to that position and I think it's very important."


"Strong banks want strong regulation. Strong banks, by definition, have strong risk management.

"We do believe, in Barclays, that we are running the bank in a way that if there is event risk across Europe, that we can manage through that - because of higher levels of capital, because we have less borrowing."

"If you noticed in our results this week, our exposure to euro sovereign debt of the peripheral countries, the countries that we are concerned about, was reduced by just over 30%.

"So I think it's important on the banks to manage their risk. I think it's a strength of the UK that we have a strong regulatory environment."

"Banks are safer and sounder, the regulatory environment is better prepared that if a bank does get into trouble, to manage that in a way that does it not create systemic risk, that depositors at the bank - the bank will be open in the morning, they'll be able to get their deposits and there'll be no tax payer money put at risk."

"I don't think the regulatory environment is completely in that position, but what we have said to our regulators here in the UK, the FSA, is we've said we'd like Barclays to be really stressed on that, we want to be a good example of a bank that, if there were a problem outside of the UK, that the regulators here would feel confident that no matter what that problem was, the branches would open in the morning, and small businesses and consumers would have access to their money."


"With the challenges of reducing spending and reducing deficits, this is a time when banks and the private sector working together - were counting on them to drive growth.

"And that's why it's so important that we can work to restore trust, both in the safety of banks, but also in how banks operate."

"We have not done a good enough job. The number of complaints is too high. The PPI [Payment Protection Insurance] period was one that we need to resolve.

"What we can do now is we can apologise, we can clear those claims as quickly as possible, which I've committed to do, and we can learn from those mistakes and never let it happen again.

"The results aren't in yet. We're not happy. I think we can be - you're going to find this surprising - we can be cuddly. We want people to come into our branches. We want to be seen that way, but we know we have a lot of work to do still."


"I think the situation across Europe is serious, I'm optimistic that some of the necessary steps are being taken, and one of the issues as you say was - and I think both the UK and the US regulators questioned - have the European banks added as much capital as the banks in the US and the UK. And so these stress tests were put in place.

"But the second issue is - particularly in terms of the discussion of how much money, how much money is available for the EFSF [European Financial Stability Facility], so we can bring down the level of interest rates across Europe.

"So if you think of the real issue that an Italian bank faces today, it is primarily their holding of soveign risk, of Italian risk. And with interest rates at 5% or 6% or 7% the fiscal situation looks different than if interest rates were at the levels they are in the UK today of 2 or 2.5%."


"What we do when we make markets in gilt-edged securities or US Treasuries, is we create a pool of investors who are there, day-in, day-out, to buy and sell the securities that are issued by the US or the UK in order to help fund the deficit.

"By doing that we reduce the interest rate, we improve the opportunities for a strong economy. And I do find it unhelpful when people do call this gambling or casino, because these risks are taken, alongside of our customers and clients whether they're pension funds, whether they're corporates, whether they're institutional investors or whether they're governments."


"My salary is just over £1m. Whether or not there is anything in addition to that is up to the board."

"We certainly understand that there's a debate about executive compensation. With my role as chief executive comes a responsibly to both be responsible, but also to operate competitively.

"Our customers and clients want us to put the best people in the jobs that take risk, and the jobs that cover clients, and the jobs that provide control.

"And so our job is to balance both being responsible, but also being competitive. In many of the business we operate in we operate globally, and we're competing with other global financial institutions - so I think that's the balance that we're constantly working on.

"Everyone in society worries about the fact that in financial institutions, there were definitely examples of pay for failure.

"There were definitely examples of banks having to take taxpayer money when things go wrong. We feel very strongly that that shouldn't happen.

"The debate that is out there today about pay packages is something we all have to listen to."

"I don't have the option to just determine what compensation is, without considering competition, without considering how I best serve my customers and clients."

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