LONDON — The time for apologies from banks is over, the chief executive of Barclays said Tuesday as he defended the large bonuses earned by some in the industry.
Appearing before a Parliamentary committee, Bob Diamond wouldn't say whether he would forgo a bonus this year as he did in the previous two years in recognition of the industry's collective failure over the financial crisis.
"There was a period of remorse and apology for banks. I think that period is over," Diamond told the Treasury Select Committee.
"Frankly, the biggest issue is how do we put some of the blame game behind us? There's been apologies and remorse, now we need to build some confidence," he added.
Prime Minister David Cameron's government has signaled that it isn't contemplating any direct action to restrict bonuses this year, but has warned it could intervene in the future if the banking sector does not show restraint voluntarily.
Treasury chief George Osborne said he and Business Secretary Vince Cable are involved in talks with Britain's major banks over the bonus issue. They want banks to increase lending to small and medium-sized businesses.
"We are in discussions with the banks to see if we can reach a new settlement where the banks pay smaller bonuses than they otherwise would have done," Osborne told the House of Commons.
Osborne said banks must lend more, pay appropriate taxes, provide jobs for British people and pledge to be responsible on pay and bonuses. "If the banks cannot commit to that I've made it very clear to them that nothing is off the table," he said.
Britain's Treasury said talks with bank executives began shortly before Christmas and are continuing.
Taxpayers invested billions in rescuing Royal Bank of Scotland and Lloyds Banking Group, which nearly collapsed under the weight of bad loans. Though Barclays remained profitable throughout the financial crisis of 2008-2009, Diamond told lawmakers that it benefited from government backing for the financial sector.
Diamond, who took over as Barclays' chief executive this month, told the committee that Britain could not have successful banks without paying bonuses.
"The system needs to be safer and sounder in terms of how compensation works, but it's in the interests of everyone in the country that we shift growth to the private sector," Diamond told the committee.
"I don't agree that I can isolate bonuses and assume that would have no consequences on the rest of the business," he said.
As lenders gain stronger footing in the wake of the financial crisis, banking executives have warned that strict caps on bonuses could drive talent overseas and decrease banks' competitiveness.
Diamond, who formerly ran Barclays Capital, is one of Britain's best-paid bankers. In 2007, his pay and bonus package was about 21 million pounds ($33 million).
As chief executive, his annual salary will be 1.35 million pounds with bonuses of up to 250 percent of that figure. The bank has said it also intends to award a long term, performance-based share incentive of 500 percent of base salary in 2011.
Diamond wouldn't say whether he intended to accept this year's bonus. "If I was going to make a personal decision, I would make it with my family as I did last year," he said.