Barclays has appointed a new leader and announced it to the world but the news has not been followed with praise from government leaders. Bob Diamond has been picked by Barclays’ Board of Directors to be the bank’s new chief executive. Diamond is considered a sensitive appointee and not only has there been outspoken negative views of the decision but investors were less than ecstatic as well.
The most outspoken against the appointment has been Business Secretary Vince Cable. However, investors weren’t supportive either as share prices fell 2.7 per cent on Tuesday and again in Wednesday morning trading. Barclay’s was the worst performer of the FTSE 100 on Wednesday morning with a 3.3 per cent decline in share price.
The fact that Vince Cable is unhappy is further amplified when considering he is the deputy chairman of the Banking Commission. This time next year the commission will report to the government their opinion on the operations of the banks and how to keep the economy safe from banks that operate so big they cannot fail. Their suggestion does not have to be accepted by the government however.
It has been considered that banks would be asked to split their retail banking apart from their investment banking. Banking executives are not happy with such a regulation. Many have expressed they would move their headquarters and operate outside the UK than face such regulations.
Cable made a statement saying: “Mr. Diamond illustrates in a particularly graphic way what happens when you have an extremely high paid head of an investment bank taking over one of these major international banks. It does illustrate the wisdom of the government’s decision to set up this banking commission to look at the structure of banks.”