WHEN: TODAY, WEDNESDAY, AUGUST 25TH
WHERE: CNBC’s “Closing Bell with Maria Bartiromo”
Following is the unofficial transcript of a FIRST ON CNBC interview with Barclays President Robert Diamond today on CNBC’s “Closing Bell with Maria Bartiromo.”
All references must be sourced to CNBC.
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BARTIROMO: JOINING ME NOW IS THE PRESIDENT OF BARCLAYS, BOB DIAMOND. SO NICE TO BE WITH YOU AGAIN AT THE BARCLAYS TOURNAMENT.
DIAMOND: SO NICE TO HAVE YOU AT THIS VENUE.
BARTIROMO: GREAT TO SEE YOU WITHOUT THE SUIT AND TIE. LET ME ASK YOU ABOUT BUSINESS. I KNOW LATER ON IN THE PROGRAM WE ARE GOING TO BE JOINED BY PHIL MICKLESON. HE WILL JOIN US ABOUT THE BUSINESS OF GOLF. LET'S STICK TO YOUR BUSINESS. THE COMPANY REPORTED FIRST HALF EARNINGS EARLIER THIS MONTH AND NET INCOME UP 29% BUT REVENUE WAS DOWN. CHARACTERIZE THE BUSINESS FOR US, WHERE ARE THE STRENGTHS AND THE CHALLENGES RIGHT NOW FOR YOU.
DIAMOND: GROUP-WISE WE HAD AN INCREASE IN REVENUE WHICH WAS IMPORTANT AND BARCLAYS CAPITAL AS YOU MENTIONED THE INCOME WAS DOWN SOMEWHAT ON THE FIRST HALF OF 2008. THE FIRST HALF OF 2008 CONDITIONS WERE VERY ROBUST AND WE DIDN'T EXPECT TO REPEAT THAT PERFORMANCE BUT OUR PROFIT WAS UP SIGNIFICANTLY AS WE CONTINUED TO MOVE BEYOND SOME OF THE LEGACY ASSETS THAT WE TOOK WRITE DOWNS IN 2008. WE DEFINITELY HAD SOME CLOUDS HANGING OVER THE MARKET IN THE SECOND QUARTER. WE HAD THE UK ELECTION AND THE POSSIBILITY OF A HUNG PARLIAMENT AND THE STRESS TEST AND THE SOVEREIGN DEBT CRISIS BOTH IN DUBAI AND THEN IN GREECE AND QUESTIONS ABOUT THE EUROPEAN UNION. WE HAD FINANCIAL REGULATION AND THE U.S. UNDECIDED. I THINK AS WE MOVED PAST AND ANSWERED MOST OF THE ISSUES, WE HAVE SEEN MORE CLIENT ACTIVITY OVER THE LAST FOUR, FIVE, OR SIX WEEKS. IT'S STILL AUGUST AND MARKETS ARE PROBABLY NOT AS ROBUST AS THEY WOULD BE IF PEOPLE WERE BACK FROM THE HOLIDAYS. BUT WE DEFINITELY ARE SEEING MORE CLIENTS WILLING TO TAKE RISKS.
BARTIROMO: TELL ME ABOUT THE LEHMAN ASSETS ACQUISITION, THE INTEGRATION. HOW IS THAT GOING? WHAT NEEDS TO BE DONE.
DIAMOND: THE INTEGRATION WAS COMPLETE AS WE WENT INTO 2008 WHICH WAS ONE OF THE REASONS WE HAD A ROBUST FIRST HALF. WE ARE SO PLEASED WITH THE ACQUISITION AND SO PLEASED WITH THE INTEGRATION. THE BUSINESSES HAVE REALLY CONNECTED. IT HAS GIVEN US AN OPPORTUNITY TO OPERATE IN THE VERY TOP TIER IN CASH EQUITIES AND M&A ADVISORY THE TWO BUSINESSES THAT BARCLAY'S WAS NOT IN PRIOR TO THAT. AND OF COURSE OUR FOOTPRINT IN THE U.S. IS NOW THE NUMBER ONE FIXED INCOME HOUSE IN THE U.S.
BARTIROMO: AND YOUR IN THE THE TOP FIVE IN INVESTMENT BANKING.
DIAMOND: OUR M&A RANKINGS BOTH IN THE U.S. AND GLOBALLY ARE PLEASING TO US, YES.
BARTIROMO: DO YOU THINK DEAL FLOW COMES BACK SECOND HALF OF THE YEAR OR ACTUALLY END OF YEAR? A COUPLE OF DEALS, WHAT ARE YOU EXPECTING?
DIAMOND: I DO. I THINK IT'S A VERY GOOD ENVIRONMENT FOR DEALS. IF YOU LOOK AT -- THERE'S A LOT OF THE CONCERNS ABOUT THE ECONOMIC SLOW DOWN, PARTICULARLY IN THE U.S., WE ARE THINKING 3% TO 4% GROWTH IT HAS BEEN CLOSER TO 2%. THE PRIVATE SECTOR IN THE U.S. IS VERY STRONG. THE PRIVATE SECTOR CORPORATE IN THE U.S. IMPROVED THEIR PRODUCTIVITY BY 2% OR 3%. DURING THIS DIFFICULT 2 TO 3 YEARS ECONOMIC CONTRACTION THEY HAVE A LOT OF CASH AVAILABLE AND NOT A LOT OF THERE'S NOT A LOT OF INVESTMENT ALTERNATIVES. THEY SEE GREAT OPPORTUNITIES IN THE EMERGING ECONOMIES AND I THINK IT IS GOING TO BE A VERY GOOD MARKET FOR CORPORATE ACTIVITY. WE ARE WORKING ON A NUMBER OF ASSIGNMENTS WITH CLIENTS. CORPORATES WITH STRONG BALANCE SHEETS, STRONG CASH POSITIONS LOOKING TO INVEST IN THEIR BUSINESSES.
BARTIROMO: YOU TALK ABOUT ALL THIS CASH ON THE BALANCE SHEETS AND I THINK WE ARE TALKING ABOUT CLOSE TO $2 TRILLION IN CASH WHEN YOU LOOK AT S&P 500 COMPANIES AND THEY ARE NOT NECESSARILY SPENDING IN THE U.S., BUT SPENDING IN THE EMERGING MARKETS. IS IT SMART NOW AS AN EXECUTIVE TO JUST RECOGNIZE YOU ARE LOOKING AT A SLOW SITUATION IN THE U.S. AND LET'S DOUBLE DOWN IN PLACES LIKE BRAZIL AND ASIA AND THE MIDEAST. WHAT ARE YOU DOING IN TERMS OF THE BUSINESS GLOBALLY?
DIAMOND: ONE OF THE THINGS WE ARE ABLE TO DO WITH THE LEHMAN ACQUISITION IS TAKE THREE, FOUR, FIVE YEARS OF GROWTH AND COMPRESS IT INTO A SHORT PERIOD OF TIME. SO OUR CHALLENGE AT BARCLAYS CAPITAL RIGHT NOW IS TO MAKE SURE WE INTEGRATE THE LEHMAN BUSINESSES WITH THE BARCLAYS CAPITAL BUSINESSES WHICH WE HAVE DONE CONTINUE TO GROW OUR EQUITY AND ADVISORY PLATFORM IN EUROPE THAT IS UP AND RUNNING AND DOING VERY, VERY WELL. WE BEGAN ACTIVE EQUITY TRADING IN HONG KONG OVER THE LAST WEEK. WE WANT TO CONTINUE TO BUILD OUT THE PLATFORM FOR EQUITIES AND ADVISORY. I THINK THE SECOND YOU TOUCHED ON IT.THE SECOND INITIATIVE IS TO CONTINUE TO INVEST IN THE EMERGING ECONOMIES AND WE CONTINUE TO SEE ROBUST FLOWS COMING IN AND GOOD OPPORTUNITIES.
BARTIROMO: LET ME TAKE YOU BACK TO THE UNITED STATES AND SOME OF THE REGULATORY CHANGES WE ARE SURE TO SEE. SHEILA BAIR WROTE AN OP-ED IN THE FINANCIAL TIMES THAT YOU SAW AND PRAISED THE BASEL COMMITTEE AND SAID THE AIM TO BOOST CAPITAL REQUIREMENTS IS WHAT WE SHOULD BE DOING AND THE CRITICS ARE WRONGLY SAYING THAT THIS WILL STIFLE LENDING AND VIKRAM PANDIT HAS BEEN ON THIS PROGRAM SAYING WHEN YOU FORCE COMPANIES TO RAISE CAPITAL, WHERE DOES THE MONEY COME FROM? THE LENDING POOL. SO WHAT ARE YOUR THOUGHTS ON WHAT'S HAPPENING WITH THE BASEL?
DIAMOND: I THINK THERE IS A LOT MORE AGREEMENT THAN PEOPLE LET ON. IT'S DISAPPOINTING TO SEE THE BLAME GAME, MARIA. THE TRUTH IS THE BANKS HAVE INCREASED CAPITAL AND HAVE REDUCED LEVERAGE.
BARTIROMO: A BIG AMOUNT
DIAMOND: IN OUR CASE, OUR CORE EQUITY WENT FROM 5% TO 10%. OUR TIER ONE EQUITY WENT FROM SEVEN AND CHANGE TO 13%. OUR LEVERAGE RATIO WENT FROM THE MID 30s TO 20 TO 1. I'M TALKING ABOUT BARCLAYS AS REPRESENTATIVE OF A NUMBER OF BIG SUCCESSFUL BANKS. ALL BANKS ARE OPERATING TODAY WITH MORE CAPITAL AND LESS LEVERAGE AND LARGER POOLS OF LIQUIDITY. THE BALL COMMITTEE HAS BEEN SMART AND LET'S MAKE SURE WE WANT THIS INTEGRATED ACROSS THE MAJOR ECONOMIES ACROSS 220. WE WANT TO HAVE A LEVEL PLAYING FIELD SO THAT CAPITAL RULES ARE THE SAME. LET'S UNDERSTAND THE IMPACT OF THE TRADING BARKS AND CAPITAL INCREASES AND ANALYZE AND STUDY BECAUSE WE CAN DO THAT. THE IMPACT ON GROWTH AND JOB CREATION AND THE FACT THAT THEY ARE BEING THIS THOUGHTFUL AND THEY WANT TO HAVE VERY CLEAR AND BALANCED GUIDELINES AND IMPLEMENT THEM OVER A REASONABLE PERIOD OF TIME. IT IS THE SAME QUESTION FOR A WHILE. WE WANT THE SYSTEM TO BE SAFE AND SOUND BUT WE WANT IT TO BE PROMOTING ECONOMIC GROWTH AND JOB CREATION.
BARTIROMO: YOU ARE COMFORTABLE THEN WITH WHAT IS GOING ON. WHAT ABOUT FINREG? A LOT OF PEOPLE COMPLAIN THAT FINREG IS TOTALLY OPEN TO INTERPRETATION. DOESN'T THAT FREEZE COMPANIES? YOU DON'T KNOW WHAT IT'S GOING TO LOOK LIKE. IF IN FACT THE REGULATORY ENVIRONMENT IS OPEN TO INTERPRETATION AND WHAT DO YOU THINK ABOUT FINREG?
DIAMOND: WE ARE DOING EVERYTHING WE CAN TO SUPPORT THE PROCESS PUTTING THIS IN WRITING AND CODIFYING THE RULES AND REGULATIONS. I THINK WE HAVE FRAMEWORK FOR THE FINANCIAL REGULATION PASS AND THAT WAS VERY, VERY IMPORTANT TO GET BEHIND US AND I THINK THEY WILL HAVE TO WORK CLOSELY WITH THE TREASURY AND THE REGULATORY BODIES AS THEY IMPLEMENT THE ACTUAL SPECIFIC RULES AND THE WRITING OF THE RULES. I THINK THERE IS A LOT OF COOPERATION ON THIS AND I THINK PEOPLE UNDERSTAND AND THE REGULATORS AND THE BANKS ARE VERY, VERY CLOSE IN TERMS OF EXACTLY HOW THESE ARE GOING TO BE IMPLEMENTED INTO YOUR POINT. IF WE CAN GET THEM IMPLEMENTED AND BEHIND US IT IS ANOTHER THING THAT IS GOING TO ADD CONFIDENCE TO THE MARKETS.
BARTIROMO: OK, REAL QUICK. BROAD ECONOMY HERE. NOURIEL ROUBINI TWEETED TODAY THAT THERE IS A 40% CHANCE OF A DOUBLE DIP. DAVID ROSENBERG, FORMER MERRILL LYNCH ANALYSTS SAYING WE ARE NOT IN A RECESSION, WE ARE IN A DEPRESSION. HOW WOULD YOU CHARACTERIZE THE BROAD ECONOMY RIGHT NOW?
DIAMOND: THE ECONOMY IN THE US HAS DEFINITELY SLOWED FROM OUR EXPECTATIONS, BUT THERE'S STILL A RECOVERY. IF ANYTHING, WE HAVE SEEN A SURPRISE IN SOME OF THE GROWTH IN EUROPE, PARTICULARLY IN GERMANY WHERE THERE IS VERY ROBUST EXPORTS IN MANUFACTURING. UNLESS THERE IS A SEVERE EXTERNAL SHOCK, A GEOPOLITICAL TYPE OF SHOCK AND SOMETHING NOT EVEN CONTEMPLATED RIGHT NOW, THERE IS NO ANALYSIS THAT SUGGESTS WE WILL HAVE A DOUBLE DIP. THE ECONOMY IS SLOWER AND THINGS WE CAN DO TO BOOST AND MAKE THE GROWTH MORE ROBUST, BUT UNLESS THERE IS AN EXTERNAL SHOCK, WE WILL NOT SEE A DOUBLE DIP.
BARTIROMO: WE WILL SEE YOU LATER.
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