Barclays to take more risks
I worry about the prospects of proper banking reform in the UK – I worry that the government will water down whatever the Vickers’ Commission reports, I worry about Osborne been too keen to relax liquidity rules and I worry that we are failing to properly debate the really big issues in banking.
I’ve also written (for example in my IPPR chapter) that the relationship between finance and property in the UK economy has created serious problems for industry and investment.
But despite all of this, I still occasionally defend the banks. When I hear people wishing that the banks would stop ‘holding us to ransom and just go’, I resist. I tell them that yes – there are huge problems with the British banking sector but I point to the tax revenues they pay, the large (and important) balance of payment effect of being a exporter of financial services and sometimes I worry about what could quickly replace them as employers.
But when I read in this morning’s FT that Bob Diamond wants to increase Barclays risk appetite, something inside of me snapped.
Bob Diamond has decided Barclays must increase its risk appetite amid internal expectations at the bank that a key measure of its profitability will fall or stay stagnant this year
They are making 7.2% return on equity – perfectly good given where interest rates are – not to mention £6bn of profits.
But a 7.2% ROE isn’t enough – they want 13% by 2013.
If Barclays seriously want to increase their risk appetite, fine. But they can do it from New York.