News In Depth
Diamond set for showdown with MPs
Bob Diamond is preparing for a showdown with MPs following his shock resignation as Barclays chief executive in the wake of the rate-rigging scandal.
Mr Diamond and his right-hand man Jerry del Missier both quit with immediate effect as the storm surrounding the interbank lending rate closed in on the Bank of England.
Ahead of his appearance before the Treasury Select Committee on Wednesday, Mr Diamond revealed details of a phonecall he had with BoE deputy governor Paul Tucker that ultimately led to some staff attempting to fix the so-called Libor.
Barclays said Mr Diamond's account of the conversation was wrongly interpreted by Mr del Missier, then a senior manager at investment arm Barclays Capital, as an instruction to lower the bank's Libor submissions.
Chairman Marcus Agius, who resigned over the affair on Monday, will remain with the bank to lead the search for a new chief executive before stepping down at a later date. Mr Agius admitted to knowing about the Libor-fixing claims for two years as the Financial Service Authority and other agencies investigated the bank's actions.
Chancellor George Osborne, who on Monday announced a parliamentary probe into banking standards, said Mr Diamond made the "right decision" for the bank and for the country. The Treasury launched a consultation on the possibility of introducing a new criminal offence covering serious misconduct in bank management.
While Labour leader Ed Miliband also backed the departure, he continued to call for a full judicial inquiry into banking culture and accused the Prime Minister of failing to recognise "the gravity and scale of this crisis".
After previously showing no signs of exiting, Mr Diamond unexpectedly put an end to his 16-year career at Barclays, admitting the "pressure" threatened the bank's future. He will reportedly be asked to give up nearly £20 million in unvested shares awarded to him in previous years, although Barclays would not comment.
The speculation comes after proxy-voting and corporate governance service firm Manifest estimated Mr Diamond had earned at least £120 million since joining Barclays' board in 2005.
Mr Diamond, 60, who took home nearly £18 million in pay rewards in 2011, is expected to "speak more freely" when he appears before MPs now he is no longer at the helm.
Barclays has submitted a copy of a note, sent from Mr Diamond on October 30 2008 to Mr del Missier, and then chief executive John Varley, recounting his conversation with Paul Tucker, to the Select Committee.
Mr Diamond said Mr Tucker had flagged concerns from senior figures in Whitehall over why Barclays was always towards the top end of Libor pricing.
Mr Diamond wrote: "His (Mr Tucker's) response was 'you have to pay what you have to pay'."
Mr Diamond said he asked Mr Tucker to explain to his Whitehall contacts that other banks were providing Libor quotes that did not represent real transactions.
The American banker then said Mr Tucker told him the bank's Libor rate did not "always" need to appear as high as it had recently.
Barclays added: "Subsequent to the call, Bob Diamond relayed the contents of the conversation to Jerry del Missier.
"Bob Diamond did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier.
"However, Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep Libors so high and he therefore passed down a direction to that effect to the submitters."
Barclays said there was no allegation by the authorities that this instruction was intended to manipulate the ultimate rate and the bank's submissions had consistently been excluded from the final Libor calculation.
The FSA investigated Jerry del Missier personally in relation to these events and closed the investigation without taking any enforcement action, Barclays added.
Mr del Missier took up his current position in June after spending three years as co-chief executive of corporate and investment banking.
In his most recent role, Mr del Missier was responsible for overseeing the construction of a ringfence around the bank's retail arm, separating it from the investment division, as proposed by the Independent Commission on Banking last year.
Mr Diamond, who was once dubbed the "unacceptable face of banking" by Lord Mandelson, remained defiant in his resignation statement.
"I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth," he said.
He added: "My motivation has always been to do what I believed to be in the best interests of Barclays. No decision over that period was as hard as the one that I make now to stand down as chief executive.
"The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen."
Earlier, Barclays said Mr Diamond's severance pay package is "still under discussion".
The bank's most recent remuneration report, for 2011, said executive directors are entitled to a notice period of 12 months and payment in lieu of notice in instalments.
This means Mr Diamond could be entitled to a full year's salary, which in 2011 was worth £1.4 million.
However, the report adds that the remuneration committee's approach when considering payments in the event of termination is to take account of the individual circumstances.
Some 32% of investors voted against or withheld votes for the bank's pay report at its annual meeting in April after the bank recorded a return of equity of just 5.8% in 2011, down from 7.2% in 2010 and far from Mr Diamond's target of 13%.
Meanwhile, the House of Lords rejected Labour's call for a judge-led inquiry into the bank rate-rigging scandal. Peers voted by 251 to 197, Government majority 54, against the plan.
Tories highlighted the reference in the phone call record to pressure from senior Whitehall figures, suggesting that Labour ex-ministers had to explain their involvement.
Backbencher Matt Hancock said: "It is now shockingly clear that senior figures in the Labour Government were involved in the question of what happened to Libor rates.
"Labour figures have serious questions to answer."
Alistair Darling, who was chancellor from 2007 to 2010, said he did not believe anyone at the Treasury would have urged improper action by the Bank.
However, he appeared to stop short of expressing confidence that no-one in government would have done so.
"Firstly, I think it is important that this committee which is examining Bob Diamond tomorrow also gets Paul Tucker in front of it at the earliest possible opportunity. Because this is Bob Diamond's account.
"But the second point is that what Bob Diamond or Barclays appear to be saying is that the Bank told them to do this.
"I would find it absolutely astonishing that the Bank would ever make such a suggestion and equally I can think of no circumstances that anyone, certainly in the department for which I was responsible, the Treasury, would ever suggest wrongdoing like that...
"The idea that anyone at the Treasury asked the Bank to do something that was improper, I just find it... there is absolutely no evidence of that, it would have been unforgivable, and I do not believe that it happened."
what do you think?
How many mebers of the board have had their throats slit then? Bloodbath????????????? not one drop of blood has been spilt.
He should be renamed ROB-BER DIAMOND
Chancellor George Osborne stated that labour where behind and knew all about the LIBOR RATES. Labour whats a public independed enquiry, but George Osborne dose not. The people that where conned where working class people with mortgages and loads. Chancellor George Osborne again tried to quash demands for a full-scale probe into the latest scandal. I'm not surprised he tried to quash an inquiry it does not benifit the rich.
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With the Tory Government and Labour opposition pointing fingers at each other some one is going to lose an eye,better call Health and Safety .
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From what I gather, they seem to have artificially *lowered* interest rates for lending. And may have cooked the books so that they did *not* have to take multiple billions in taxpayer funded bailouts. If so ... maybe it was illegal or immoral - but it still looks like doing the rest of us a favour! But if I have misunderstood - more than possible - then perhaps someone who does understand it can explain!