The appointment of Bob Diamond as the chief executive of Barclays has revealed a split in the coalition along party lines.
According to reports, senior Liberal Democrats have crticised the appointment but the Prime Minister and the Treasury declined to do so.
Liberal Democrat Treasury spokesman Lord Oakshott said the bank was “putting up two fingers” to the Government and the Bank of England, calling the appointment “outrageous”.
He says: “He is a great gambler but he has no experience of retail banking. It is an extraordinary decision by the Barclays board.”
The Times says business secretary Vince Cable “privately made clear his concerns”, apparently arguing the bank “failed to appreciate public anxiety about the risks posed to by investment banks”.
Speaking in Brussels yesterday chancellor George Osborne said: “It is up to the shareholders who the chief executive of Barclays is and I very much look forward to working with Bob Diamond on issues of mutual concern.”
The Liberal Democrats want “universal” banks to be broken and while the coalition have set up a commission to look at the future of banking the chancellor retains the right to ignore its findings.
The commission is due to report next year.
Osborne said: “I want London to be a competitive place to do business but I also want to make sure that the British taxpayer is protected in a way that it was not in the past from the systemic risk that very large banks can pose.”
During the election Osborne singled out Diamond for criticism saying his pay and incentive package in the wake of the financial crisis “beggared belief”.