Bank industry shake-up seen ahead - Barclays boss

LONDON Mon Oct 25, 2010 7:10pm BST

Barclays PLC President Bob Diamond waits to pose for photographs after being named as the company's next chief executive officer at a bank branch near their Canary Wharf headquarters in London September 7, 2010. REUTERS/Dylan Martinez

Barclays PLC President Bob Diamond waits to pose for photographs after being named as the company's next chief executive officer at a bank branch near their Canary Wharf headquarters in London September 7, 2010.

Credit: Reuters/Dylan Martinez

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LONDON (Reuters) - There will be a shake-up of Europe's banks in the next five years, with significant consolidation and restructuring, the incoming head of British bank Barclays Plc (BARC.L) said.

"We're going to see significant consolidation and significant restructuring over the next three to five years in banking in general, and particularly in Europe," Bob Diamond, president of Barclays, said on Monday.

Barclays struck one of the biggest bank deals of recent years with its takeover of the U.S. operations of Lehman Brothers late in 2008, after seeking to buy Dutch bank ABN AMRO in 2007 but being outbid by a consortium led by Royal Bank of Scotland (RBS.L).

Diamond, who is head of the Barclays Capital investment bank and will take over as group chief executive at the end of March, also said at the Confederation of British Industry's annual conference that banks should not receive taxpayer money and strong banks are in favour of strong regulation.

"No bank should ever, ever receive taxpayer money," said Diamond. Barclays raised billions of pounds from investors in the Middle East and elsewhere to rebuild capital during the financial crisis, while rivals RBS and Lloyds (LLOY.L) both needed the UK government to step in with multi-billion-pound bailouts.

Antonio Horta-Osoria, the head of the UK operations of Spain's Santander (SAN.MC), added: "Any failing bank should be allowed to fail in an orderly way, without the taxpayer having to step in."

Diamond's comment that "strong banks want strong regulation" came as debate rages about how far regulators should clamp down on the industry after the crisis.

Banks will need to hold far more capital than in the past under new global rules, and countries such as Britain and Switzerland may force their banks to hold additional cushions.

(Writing by Steve Slater; Editing by David Cowell)

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