Cable wary of Diamond appointment

By Alex Stevenson

Vince Cable has responded with caution to the appointment of “casino” banker Bob Diamond as Barclays’ next chief executive.

The business secretary’s note of concern came a day after the 59-year-old American, who is thought to be worth over £90 million, was unveiled as John Varley’s successor for one of the City’s top jobs.

“Mr Diamond illustrates in a particularly graphic way what happens when you have extremely high-paid head of an investment bank taking over one of these major international banks,” Dr Cable told the Today programme.

He said it was not government’s place to appoint the head of a private bank but hinted at political involvement over “how our banks can be made safe”.

“We are worried by this combination of the casinos and traditional banking,” he added. The coalition government has established a banking commission which is investigating whether banks’ high street and investment functions should be separated.

Dr Cable and the Liberal Democrats were fierce supporters of such a move during the general election, but their Tory coalition partners – who as a party are much more closely aligned with the City – have reacted with caution.

The business secretary appeared to pave the way for a climbdown, saying other countries were addressing the issue in different ways.

“The Americans have just brought forward financial reforms. It may well be there are better ways of dealing with this,” he said.

“The key point we have to keep coming back to is that although the banking crisis has slipped into the background, we still have a problem which is that our major banks… are underpinned by the British taxpayer.

“They are potentially a risk and we have to keep them safe.”

Recommendations by the banking commission are expected to be made this autumn.