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Barclays CEO resigns as the Libor rate fixing scandal widens

Wednesday, July 4th 2012 - 05:58 UTC
Full article 13 comments
Diamond suggested Bank of England had encouraged Barclays’ to manipulate figures. Diamond suggested Bank of England had encouraged Barclays’ to manipulate figures.

UK Barclays chief executive Bob Diamond suddenly quit on Tuesday over an interest rate-rigging scandal that threatens to drag in a dozen more major lenders but suggested the Bank of England had encouraged his bank to manipulate the figures

“The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen,” said Diamond, 60. The terms of his severance were not announced, though Sky News said the bank would ask Diamond to forfeit almost 20 million pounds in bonuses.

Politicians and newspapers have zeroed in on the scandal - which revealed macho e-mails of bankers congratulating each other with offers of champagne for helping to fiddle figures - as an example of a rampant culture of wrongdoing in an industry that stayed afloat with huge taxpayer bailouts.

Barclays released an internal 2008 memo from Diamond, then head of its investment bank, suggesting that the deputy governor of the Bank of England, Paul Tucker, had given Barclays implicit encouragement to massage the interest figures lower during the peak of the financial crisis in order to present a better picture of the bank's financial position.

According to the memo, Tucker told Diamond he had received calls from senior government officials. “It did not always need to be the case that we appeared as high as we have recently,” Diamond said he had been told.

The Bank of England declined to comment, but analyst Ian Gordon at Investec said: “Based on first inspection it does seem to suggest that Barclays have received a message from the Bank of England which provided, to put it mildly, significant encouragement.

”So they're maybe trying to share the blame but with justification. It raises a whole bunch of questions, and they're very serious and they're for the Bank of England to answer.“

However, Alistair Darling, Britain's finance minister at the time, said he found it hard to believe that the central bank would have made such a suggestion: ”What Bob Diamond or Barclays appear to be saying is that the Bank (of England) told them to do this,“ said Darling, whose Labour party is now in opposition.

”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 which I was responsible for - the Treasury - would ever suggest wrongdoing like this,“ he told Channel Four television.

Noting how the central bank provided cash to help ease the upward pressure on commercial banks' borrowing costs, he said: ”Policy was changed in order to get that rate down.

”However it would have been reprehensible and wholly unforgivable if anyone had attempted to try and manipulate this rate by simply putting in false figures”, he insisted.
 

Categories: Economy, Politics, International.

Top Comments

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  • LightThink

    Did you learn to manipulate the figures from INDEC ?

    Jul 04th, 2012 - 08:49 am 0
  • DanyBerger

    @LightThink

    And do you have to see the govt. figures about unemployment, inflation, external debt, etc.

    Jul 04th, 2012 - 09:11 am 0
  • LightThink

    Their inflation is low but unemployment,external/internal debt figures are unspeakable .

    Jul 04th, 2012 - 01:22 pm 0
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