James Anderson, manager of the £1.4bn Scottish Mortgage Investment Trust, yesterday claimed Barclays Capital head Bob Diamond was "someone who really doesn't deserve the rewards he has got" as he called for sweeping changes in the banking sector.
Hammering home his belief that the problems with the western world's banking system had not been solved, and his fears that they could cause another crisis in perhaps five years' time, Anderson said: "I think the fundamental culture of these banks has to be changed I don't think casino capitalism in Britain and America has gone away."
Anderson, chief investment officer of venerable Edinburgh investment house Baillie Gifford, declared Scottish Mortgage now had no investments in a UK banking sector which has had to undertake huge equity-raising because of the global credit crisis. In this regard, he highlighted Barclays as the UK bank which he disliked particularly. He said: "I just think there is too much dilution involved. The one I find most difficult from this point of view, because I just can't stand them, is Barclays."
Barclays avoided taking government money by raising capital from Middle Eastern investors in a controversial exercise late last year.
Barclays director and investment banking division head Diamond has long been one of the top earners in European banking, although he saw his pay slump 99% to £250,000 last year, from more than £21m in 2007.
Diamond attracted political flak two weeks ago when it emerged that he would reap a £22m gain from the sale of the Barclays Global Investors fund management business to BlackRock.
In the wake of the global credit crisis, Anderson said the part "that still disturbs me the most is we haven't actually changed that" attitude to risk in the western world's banking system. In terms of the economic and equity market backdrop, he said this failure to solve the banking sector's problems was "the part I feel most hawkish about".
Referring to Royal Bank of Scotland, he said: "I still don't, in retrospect, understand what a standard commercial bank ought to have been doing originating and distributing mortgage products in Connecticut in the volumes they were."
He also railed against the payment of bonuses to investment bankers at Merrill Lynch, even though this institution had to be rescued by Bank of America, and took issue with the amount of money made by hedge fund managers.
Anderson wants separation of investment banking and commercial banking, a division which was introduced in the US by the Glass-Steagall Act in 1933 but abandoned in 1999.
He declared: "I would absolutely agree that, if a bank is too big to fail, it is too big to exist."
And he added: "Isn't it completely inappropriate that the Royal Bank of Scotland was doing that type of casino business at the same time as providing basic banking services?"
Anderson also wants limits on leverage, to prevent banks' balance sheets becoming over-extended again, and a ban on certain financial instruments such as credit default swaps.
Anderson emphasised he found Diamond's rewards much less acceptable than the potential £9.7m remuneration package granted this week to new-broom Royal Bank chief executive Stephen Hester.
Although highlighting a need for more evidence that the long-term returns were going to justify Hester's package, Anderson high-lighted his belief that Hester seemed to be a responsible person doing a responsible job.
He added: "Horrifying though it is the amounts of money they are talking about, they are nothing compared with what people on Wall Street - the hedge funds - are making."
Scottish Mortgage, while shunning UK banks, has increased its stake in Santander of Spain significantly and bought into US bank Wells Fargo.
