Bankers gathered in the Swiss mountains to discuss the state of the financial system are less worried than a year ago over the risks to the sector from the euro zone's debt crisis, Barclays Chief Executive Bob Diamond said on Thursday.

2011 was a year of great fear around (sovereign debt risk). Going into 2012 we feel somewhat more comfortable because progress has been made, Diamond told Reuters on the sidelines of a closed-door bankers' meeting.

Diamond said the overall mood was still cautious given the growth challenges yet to be faced, but bankers had praised steps taken towards a euro zone fiscal union and the European Central Bank's decision to provide cheap funding for banks.

The actions taken by Draghi with the LTRO (Long-term Refinancing Operations) have been recognised as a step in the right direction, he said, referring to ECB head Mario Draghi's decision to provide almost half a trillion euros in cheap loans to banks.

He added that bankers still wanted to ensure any default by Greece was orderly as talks continue between Athens and its private sector creditors on agreeing the terms of a managed write-down of its outstanding debt.

(Reporting by Lisa Jucca; Editing by Peter Graff)