Barclays' Bob Diamond hits out at criticism of 'casino banks'

Bob Diamond, the new chief executive of Barclays, hit back at criticism of "casino banks" today by saying his accusers did not understand the way banks worked.

The appointment of Diamond, formerly head of Barclays' investment banking diivison, lastr week provoked a storm of criticism from unions and politicians, citing concerns that banks have not heeded the lessons of the financial crisis and were handing the reins to risk takers.

But Diamond, a controversial figure who has earned more than £75m in the past five years, defended his bank's activities and its role in the UK economy.

"These aren't casino businesses, these are real client-driven businesses," he told the Sunday Telegraph. "We are providing services to corporate clients, to fund managers, to retail clients through branch banking and high net-worth banking."

Business secretary Vince Cable, a persistent critic of the banks, greeted Diamond's elevation by highlighting worries about the "combination of the casinos and traditional banking".

Diamond said: "It's disappointing when we hear reference to banks as casinos. It's disappointing when we hear reference that Barclays Capital as a casino – we closed down our proprietary trading in 1998. It is just not right to use a phrase like that to encompass investment banking or banking, it is not based on fact and it creates the wrong impression."

"We will hear drama from people who have a vested interest. We will hear words like 'casino banking' that have no basis in reality and generally come from people who don't understand what a bank does and how important risk is in terms of the business we do with our clients.

However, Diamond, who is credited with rebuilding Barclays' investment banking arm, said he would engage with the banking commission set up by chancellor George Osborne, which is examining the case for breaking up Britain's biggest banks.

"We have a very strong view that our business model fits exactly what is the right model for the UK," he told the newspaper. "But we have total respect for the process and the committee. We are going to work with them and engage."

Diamond said he would work to improve some aspects of Barclays' business that had underperformed, including commercial banking outside the UK, where activities would be more closely aligned with Barclays Capital.

He said he saw the banking market in sub-Saharan Africa as a "huge opportunity", but was cooler on the retail sector in North America, where the bank was said to have been on the lookout for deals.

"Both (outgoing CEO) John (Varley) and I would love to make an acquisition that made sense financially and accelerated our strategy in our wealth business," he told the paper.

"But the truth is everything we have seen in the last couple of years, either the price has been crazy or the business is something that would not integrate well. The same is true in western Europe and our retail business – we have to assume we are going to do it day by day, brick by brick, client by client.