Scam pins Barclays chief
Interest rate rigging scandal nets first big fish, more honchos to follow
Barclays Plc chairman Marcus Agius quit on Monday, saying “the buck stops with me” after an interest rate rigging scandal that has dealt “a devastating blow” to the bank’s reputation.
Mr Agius, chairman of Britain’s third biggest bank, is the first major scalp from the scandal, which is likely to draw in more banks and could equally embarrass regulatory authorities.
But his resignation did not take the heat off chief executive Bob Diamond — also under pressure to go.
“The buck in Barclays stops with Bob Diamond, and it is Bob Diamond who must accept responsibility,” said John Mann, a Labour politician who is part of a panel of lawmakers who will grill mr Diamond on Wednesday and Agius on Thursday.
“He (Diamond) must resign. He’s got to go. There is no role for people like him if banking is to be trusted again in this country and if British banking is to restore its tarnished reputation in the world, which of course is of great importance to our economy,” Mr Mann said.
Prime Minister David Cameron has called the scandal “extremely serious” and the said management had “some big questions to answer”. Authorities also ordered a review into the working of a key lending rate between banks.
The affair comes at a time when banks in Britain, already under fire for their role in the financial crisis, are facing a new wave of public outrage.
A technology problem at RBS shut millions of customers out of their accounts last month, and evidence showed banks missold financial products to small businesses. Mr Diamond and Mr Agius have also faced calls from some shareholders to resign after Barclays was Agius’ resignation comes in the wake of Barclays being fined $453 million by British and US regulators for submitting inaccurate submissions on the Libor rate The Libor rate is used worldwide as a benchmark for prices on about $350 trillion of derivatives and other financial products Barclays has admitted that it submitted artificially low estimates of its borrowing costs from late 2007 to May 2009 because it thought rivals were doing the same and higher submissions would make it appear to be in trouble. last week fined $453 million by British and US regulators for submitting inaccurate submissions on the Libor interest rate.
Several of the bank’s largest investors — including Standard Life Investments, Scottish Widows Investment Partnership and Fidelity Worldwide Investment — have so far resisted calls to comment on Mr Diamond’s future, at least until after his appearance at the parliamentary committee hearing.
Barclays has admitted that some of its traders attempted to manipulate the setting of the London interbank offered rate (Libor), which is used worldwide as a benchmark for prices on about $350 trillion of derivatives and other financial products.
“Last week’s events — evidencing as they do unacceptable standards of behaviour within the bank — have dealt a devastating blow to Barclays reputation...The buck stops with me, and I must acknowledge responsibility by standing aside,” Agius said in a statement.
“I am truly sorry that our customers, clients, employees and shareholders have been let down,” he said.
Lawmakers are likely to quiz Mr Agius and Mr Diamond on what the Bank of England (BoE) and other regulators knew about the rate-rigging.
Details in documents released by US authorities last week could prove embarrassing to the BoE, after sources said a key conversation held in October 2008 cited in the documents was between Mr Diamond and BoE deputy governor Paul Tucker. — Reuters