Don't impose windfall tax, Diamond warns Darling

London's best-known investment banker today warned Chancellor Alistair Darling against imposing a windfall tax on bankers' bonuses in his pre-Budget report tomorrow.

Bob Diamond, president of Barclays and head of BarCap, said that plans to tax bankers' bonuses weren't "supported by the principles we adopted" when the banks signed up to the Financial Services Authority's new code on remuneration.

"It's very important to recognise that major financial centres are balanced in terms of regulatory efforts around capital, around accounting, and around compensation," Diamond said. "We really need to make it a race to the top, not a race to the bottom."

Diamond said politicians and regulators need to ensure reform is co-ordinated across the major economies.

"It's extremely important that around the large economies and financial centres we create a level playing field around capital, accounting and compensation," he said.

"Since the crisis began in summer 2007 some things are pretty clear: banks needed more equity, banks probably needed to operate with less leverage and more liquidity, and we needed a regulatory framework that was more intrusive domestically and more interconnected around the world."