‘Capital disadvantage’ for giant banks: Bob Diamond
Large banks offering an array of financial services are finding it harder to access capital in the wake of tougher regulation, the former head of Barclays told CNBC on Wednesday.
"For many years—really, for 25 years—consolidation, growth and increasing complexity was the trend and universal banking had a capital advantage. And I think today, there is a capital disadvantage in some ways for the universal banking model," Bob Diamond told CNBC in Cape Town from the World Economic Forum.
Diamond's career in global banking spans 40 years and appeared to peak in 2011 when he was appointed chief executive of leading U.K. lender Barclays. However, he only lasted 18 months at the helm, resigning in July 2012 following the bank's interest rate-rigging scandal.
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Diamond reappeared on the London financial scene at the end of 2013, co-founding Atlas Mara, a financial services group focused on sub-Saharan Africa that listed on the London Stock Exchange.
The group has a market capitalization of around £534 million, compared to Barclays' £45 billion.
However, so-called systemically important banks such as Barclays have come under far tougher scrutiny and regulation in the wake of the 2007-08 financial crisis.
This has spurred speculation that emerging market-focused rivals of Barclays, like HSBC and Standard Chartered, might quit the U.K. to headquarter elsewhere.
"I think there is a very important future for universal banks, based on customer needs and client needs and those have not changed. But there is not a capital advantage," Diamond told CNBC.
Atlas Mara has pursued the same aggressive expansion strategy in Africa that Diamond espoused as head of Barclays, acquiring control or significant stakes in banking operations in Nigeria, Botswana, Zimbabwe, Zambia, Tanzania and Rwanda.
Diamond told CNBC that he wanted presence in 10-15 key countries in sub-Saharan Africa—"not just the largest"—in all of the region's main trading blocks.
"Our goal was both very simple and very bold—to be the leading financial services organization in sub-Saharan Africa," Diamond said.
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In another echo of his Barclays days, Diamond suffered shareholder protest last month, when 9 percent of investors voted against his reelection to the board of Atlas Mara, due to independence concerns regarding his membership of the group's audit committee. Diamond was the only director to receive less than 99 percent of votes.
Atlas Mara posted a profit of $0.5 million for the first three months of 2015.