The chief executive of Barclays has renewed speculation over the bank’s future in the UK if the British government pushes ahead with sweeping reforms of the industry.
Speaking to investors last week about proposals to force British banks to build a wall around their core high-street operations, Bob Diamond said: “It’s no longer a question of whether Barclays wants to stay in the UK but whether the UK wants Barclays.”
The comments came as Barclays stepped up its challenge to the ringfenced model proposed by the Independent Commission on Banking.
Last week Mr Diamond warned that any move to isolate banks’ high-street businesses would limit the availability of credit for borrowers in the UK. However he insisted that Barclays would work with the reforms and was closely engaged with Sir John Vickers, who is leading the ICB.
Sir John is due to publish the ICB’s final recommendations on September 12.
He is expected to opt for a strict version of ringfencing that would prevent banks from using protected funds such as customer deposits to subsidize operations outside the wall, such as investment banking or large-scale corporate lending.
This model would be more disruptive than banks had anticipated, particularly for Barclays and Royal Bank of Scotland, which have big UK-based investment banking divisions.
While banks have eased off threats to leave the UK in recent months – partly after the government promised to maintain its competitiveness – they have been keen to emphasise the potentially damaging economic implications of Vickers’ commission proposals.
Stephen Hester, chief executive of RBS , last week said they could increase risk and inflate costs. HSBC , which has repeatedly faced questions over its commitment to the UK, said the recommendations would “inform” its triennial review of where it should be headquartered, due in the autumn.
Analysts have always been sceptical over whether any of the banks would realistically want – or be able to – relocate and believe the recent turmoil in the markets would only make a move less likely.
Barclays’ first choice outside the UK would likely be New York, given the presence of its investment banking arm there, but analysts question whether US regulators would want to take on another large bank, particularly at such a fraught time.
Responding to Mr Diamond’s comments to investors, which were first reported by Sky News, Barclays said: “In public and in private we are very clear that the UK has been our home for over 300 years and we have no desire to change that.”