Barclay's new chief Diamond warns regulation 'will make loans more expensive'
Barclays' incoming chief executive Bob Diamond renewed fears over the cost of borrowing as he warned stricter banking rules will make funding more expensive.
The group's investment banking chief, named earlier this month as John Varley's successor, said banks faced tough challenges in supporting economic growth through lending while also meeting stringent regulations.
In a speech to an industry conference, Mr Diamond said debt and equity markets would become difficult, with funding "more scarce and probably more expensive".
He added: "Clearly this presents a whole new challenge in how we serve our customers and clients - whether they're large corporations or retail customers seeking a mortgage, they'll be looking for access to cost-effective funding."
Basel III rules, which were unveiled earlier this month, will force banks to more than double the spare cash they hold under new global regulations designed to prevent a repeat of the financial crisis.
The industry has raised concerns the new capital requirements will make it harder for banks to lend, with the British Bankers' Association saying they spelt the end of the "cheap money era".
Mr Diamond signalled that service will become more important as banks struggle to compete on cost.
"Customers' decisions will be relationship led, not transaction or price led," the bank boss said.
Currently head of Barclays Capital and president of the wider bank, he confirmed Barclays had enough capital to meet the Basel rules - without having to turn to shareholders for more cash.
He added banks have a part to play in helping a private sector-led recovery, as long as the rules allow.
"We can help governments stimulate private sector growth as they make public spending cuts if the conditions are right," he said.
Banking reforms must be "carefully calibrated" to support the wider aim for banks to support clients and aid economic growth, he added.
Many consider Mr Diamond - with an estimated worth of £100m - to be the epitome of the excessive bonus culture.
Although he waived his bonus last year after widespread criticism of bankers, he received £26m for his shares in Barclays Global Investors, the bank's fund management business, when it was sold to America's BlackRock.
Mr Diamond was criticised in April by politicians including then Business Secretary Lord Mandelson and Vince Cable when it was claimed he received £63m under a reward scheme. However, in his new role, Mr Diamond will receive an annual bonus of £3.375m on top of his salary, as well as a long-term performance-based incentive worth £6.75m.
Barclays said the payments were industry benchmarked.