- Chairman Marcus Agius announces his resignation and Labour leader Ed Miliband calls on chief executive Bob Diamond to go too
- David Cameron announces full Parliamentary committee of inquiry
- Mr Diamond allegedly spoke to deputy governor of the Bank of England in October 2008 in a phone call 'that led to Barclays staff thinking they had been instructed to lower Libor submissions'
- Barclays launches audit to review 'flawed' past practices as Serious Fraud Office promises to decide whether to bring criminal charges within a month
- RBS sacks four of its traders over their alleged role in the affair
- Mr Diamond will be questioned by MPs at a Select Committee this week and is facing calls for him to hand back previous bonuses by investors
Defiant: Bob Diamond refuses to resign over the Libor rate fixing scandal
Bob Diamond told staff in a memo: 'I am disappointed because many of these behaviours happened on my watch. It is my responsibility to make sure that it cannot happen again.'
His memo came hours after the resignation of the bank's chairman Marcus Agius and the emergence of sensational evidence that traders believed they were fiddling the inter-bank lending rate figures with the approval of the Bank of England.
The Financial Services Authority's report into Libor fixing said there had been a misunderstanding arising from a conversation between Bank Deputy Governor Paul Tucker, a favourite for the Governor role, and a senior Barclays official, reported to be Mr Diamond, on October 29 2008.
This afternoon Prime Minister David Cameron announced a full Parliamentary committee of inquiry would be set up in the wake of the scandal.
The committee, chaired by treasury Select Committee chairman Andrew Tyrie, will report its findings before the end of the year.
Investors gave Mr Agius' departure their support this morning, with Barclay's share price leaping five per cent to 171.05p, later falling away to close just under three per cent up.
But Mr Diamond was also facing calls from some shareholders to hand bank bonuses from previous years because of the scandal, it was reported.
Barclays has agreed to launch an audit, led by Sir Michael Rake, to review 'flawed' past practices that have been revealed.
The findings of the inquiry will be revealed in a public report and the bank will produce a new, mandatory code of conduct.
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Solemn: Former Barclays Chairman Marcus Agius who announced his resignation today is pictured leaving home this morning
Mr Agius said: 'Last week's events - evidencing as they do unacceptable standards of behaviour within the bank - have dealt a devastating blow to Barclays reputation.
'As chairman, I am the ultimate guardian of the bank's reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside.'
He added: 'It goes without saying that Barclays will continue to have my wholehearted support in the future.'
Shortly after the resignation, Labour leader Ed Miliband called for Mr Diamond to quit too.
He told ITV1's Daybreak programme: 'I don’t think he can carry Barclays forward because I think that he was there, he was actually in charge of the part of Barclays where some of these scandals took place some years back.
'We will obviously hear what he has to say at the Select Committee on Wednesday but I really don’t believe that the kind of leadership for the future and restoring trust in British banks - that is really important - I don’t think that can be done by Bob Diamond.'
He added: 'I don’t just want to see criminal sanctions though. I want to see a new code of conduct for bankers, there is no proper professional code for bankers.
Under pressure: Mr Agius (right) stands alongside Barclays chief executive Bob Diamond (centre), and former chief executive John Varley (left)
BOB DIAMOND'S DEFIANT MEMO TO BARCLAYS STAFF ON LIBOR
In the letter, Mr Diamond said it had been 'an incredibly tough period' for staff given the 'nature and volume of negative comment' against Barclays.
He said: 'I understand why the reaction has been severe. No one is more sorry, disappointed and angry about these events than I am.'
He added: 'I am disappointed because many of these behaviours happened on my watch. It is my responsibility to make sure that it cannot happen again.'
He went on: 'I am angry because the impression has been given that the behaviour revealed in the documents last week is indicative of the culture at Barclays generally.
'I love Barclays, and I am proud of all of you. We all know that these events are not representative of our culture, and it is my responsibility to get to the bottom of that and resolve it.'
Turning to taking action against those involved, Mr Diamond said that an internal disciplinary process, which began some time ago, will be completed swiftly.
He said: 'I understand why the reaction has been severe. No one is more sorry, disappointed and angry about these events than I am.'
He added: 'I am disappointed because many of these behaviours happened on my watch. It is my responsibility to make sure that it cannot happen again.'
He went on: 'I am angry because the impression has been given that the behaviour revealed in the documents last week is indicative of the culture at Barclays generally.
'I love Barclays, and I am proud of all of you. We all know that these events are not representative of our culture, and it is my responsibility to get to the bottom of that and resolve it.'
Turning to taking action against those involved, Mr Diamond said that an internal disciplinary process, which began some time ago, will be completed swiftly.
Mr Diamond said Mr Agius's decision 'deserves all of our respect'.
He said: 'He has been a thoughtful and supportive colleague to me in all of my roles - especially since I became chief executive last year - and for this I will always be grateful.'
He added: 'I welcome the board's undertaking of an independent, third-party audit of our business practices.
'I am committed to ensuring that the recommendations from this review are implemented in full, as part of a broader programme to continue to build a culture that all of those with a stake in Barclays can be proud of.'
Fraud investigators today said they would decide within a month on whether a criminal prosecution was appropriate.
A statement from the Serious Fraud Office said 'the issues are complex' and added it is 'considering whether it is both appropriate and possible to bring criminal prosecutions'.
Today Mr Agius also resigned from his role as chairman of the British Bankers' Association (BBA), the trade association said.
LIBOR: THE 'GLOBAL ECONOMY'S PULSE-RATE'
WHAT IS LIBOR?
It stands for the London interbank offer rate and is the interest banks charge to borrow from each other. Banks rely on this money to lend to customers and businesses. Its equivalent in Europe is called Euribor.HOW DOES IT AFFECT ME?
The rate banks pay to raise money affects how much they charge on loans and mortgages. An increase in Libor can add hundreds of pounds to households’ annual mortgage repayments or a loan to a small business.
This was seen with dramatic effect in the run up to the financial crisis, when Libor soared and lenders raised their rates. It is also used as the benchmark for trillions of pounds in complex financial investments.
Three-month sterling Libor from 2006 to 2012: The rate broadly runs in line with the UK base rate except for the crunch period in 2008 and in recent months
HOW IS IT SET?
The rate is set every morning by a panel of banks and overseen by trade body the British Bankers’ Association. Each bank sets the rates at which it believes it can borrow, from overnight to 12 months. There are 150 Libor rates, spanning ten currencies and 15 time periods.WHAT HAS BARCLAYS BEEN DOING?
Barclays’ traders speculating on movements in interest rates were manipulating Libor in an effort to make huge profits.
Its traders were conspiring with the ‘submitters’ at the bank which lodge their Libor rates every morning. Depending on the way they were betting, traders would urge these submitters to increase the Libor rate or lower it.
Barclays’ traders also conspired with ex-employees working at other banks to try to influence their Libor submissions. During the financial crisis Barclays also fiddled the figures to dupe the market into thinking it was more financially sound than it was.
Libor is often seen as a barometer of how healthy a bank is. Just as customers with bad credit records have to pay higher interest rates, banks which are deemed in poor financial health are charged more to borrow.
Barclays became anxious that its Libor rate was higher than many of its peers and that they were fiddling the figures. It decided to join the party.
ARE ANY OTHER BANKS DOING THIS?
It is likely this is just the tip of the iceberg. Barclays is just the first to get caught.
For the last two years a dozen regulators on three continents have been combing through the files of more than 20 banks involved in the rate setting process.
Swiss bank UBS is understood to have already suspended a number of traders, as has the Royal Bank of Scotland. Lloyds, and HSBC last week said they were helping the Financial Services Authority with its enquiries.
A spokesman for the Prime Minister said today: 'The FSA have been examining this issue of criminal sanctions, working with the Serious Fraud Office,' he said.
'Clearly it is not possible to apply laws that weren't in place, so the prosecuting authorities need to look at those issues in the light of the law as it was at that time.
'They need to follow the evidence wherever it takes them, but they can only apply the law as it stood at the time.
'That is one reason we also want to look at the future and whether or not we need to toughen the law in these areas.'
Last night it was suggested that as he fights to keep his job, Mr Diamond could give ‘explosive’ testimony about discussions with the Bank of England when he appears before MPs later this week.
A spokesman for the Bank of England responded to the allegations saying: 'It is nonsense to suggest that the Bank of England was aware of any impropriety in the setting of Libor.
Royal Bank of Scotland CEO Stephen Hester has fired four traders for their role in the Libor-fixing scandal
Barclays was fined a record £290million for its role in rigging the interbank interest rate, which affects how much customers pay for mortgages and credit cards.
Baroness Wheatcroft, a Tory peer formerly on the Barclays board, suggested that Mr Diamond should also go.
And, as calls increased for a judicial inquiry into the financial sector, Business Secretary Vince Cable said the Government would look at criminal sanctions for directors of failed banks and said the Serious Fraud Office was ‘taking a fresh look’ at the affair.
It also emerged that 14 Barclays traders – from both sides of the Atlantic – were being investigated in the U.S. by the FBI.
Mr Agius, 65, an ultra-smooth former investment banker at Lazard, was paid a salary of £750,000 a year at Barclays.
HOW BARCLAYS TRADERS CONSPIRED TO FIX THE MARKETS
Between 2005 and 2009, more than 200 requests were sent, usually by email or instant messenger - by traders to the Barclays Libor submitters.
In one example of several provided by the FSA, a trader emailed the Barclays Libor submitter in March 2006, writing: 'The big day [has] arrived… My NYK are screaming at me about an unchanged 3(month) libor. As always, any help wd be greatly appreciated. What do you think you’ll go for 3(month)?'
The submitter replied: 'I am going 90 altho 91 is what I should be posting.'
The trader thanked him, saying: '..when I retire and write a book about this business your name will be written in golden letters.'
The submitter then replied: 'I would prefer this [to] not be in any book!'
In another example from April 2006, a trader requested low one month and three month U.S. dollar Libor rates shortly before the submission was due.
He asked: 'If it’s not too late low 1m and 3m would be nice, but please feel free to say “no”... Coffees will be coming your way either way, just to say thank you for your help in the past few weeks.'
The submitter replied: 'Done... for you big boy.'
In one example of several provided by the FSA, a trader emailed the Barclays Libor submitter in March 2006, writing: 'The big day [has] arrived… My NYK are screaming at me about an unchanged 3(month) libor. As always, any help wd be greatly appreciated. What do you think you’ll go for 3(month)?'
The submitter replied: 'I am going 90 altho 91 is what I should be posting.'
The trader thanked him, saying: '..when I retire and write a book about this business your name will be written in golden letters.'
The submitter then replied: 'I would prefer this [to] not be in any book!'
In another example from April 2006, a trader requested low one month and three month U.S. dollar Libor rates shortly before the submission was due.
He asked: 'If it’s not too late low 1m and 3m would be nice, but please feel free to say “no”... Coffees will be coming your way either way, just to say thank you for your help in the past few weeks.'
The submitter replied: 'Done... for you big boy.'
As chairman of Barclays he is meant to hold the executives, including Mr Diamond, to account and prevent excessive risk taking.
Mr Diamond, who ran the investment banking unit Barclays Capital before taking over as chief executive of the entire group, is responsible for the day-to-day running of the bank.
Last night, Baroness Wheatcroft said: ‘I think it’s very uncomfortable for both of them. I am not in the boardroom now, so I don’t know how the tenor of debate is going, but I think certainly they must be looking at what’s being said in Parliament, by the governor of the Bank of England, and wondering whether they can go on like this.’
Mr Agius – an archetypal silver-haired City grandee – is likely to be replaced by one of the senior independent directors on the Barclays board.
Sir Michael Rake, a former top accountant who serves as chairman of BT and easyJet and owns a polo pony stud farm in Argentina, is among the front-runners.
But the job could go to Sir John Sunderland, another non-executive director at Barclays, ex-chairman of Cadbury, and former president of the Confederation of British Industry business lobby group.
The new chairman will come under immediate pressure to shake-up the Barclays board.
Liberal Democrat peer Lord Oakeshott said last night: ‘Marcus Agius going while Bob Diamond stays would be no solution to this scandal. Diamond is the driver and Agius only a passenger in the Barclays car crash.’
Mr Agius is widely seen as the fall-guy in the wake of the latest scandal to engulf Barclays. He has had a frosty relationship with shareholders for much of his six-year tenure.
Some shareholders felt he was not tough enough to stand up to the headstrong Mr Diamond – who has insisted he will not resign. He was also widely criticised over Mr Diamond’s £17million pay packet at the annual meeting of shareholders in May.
Mr Diamond has forfeited his bonus for this year, as have fellow executives Jerry del Missier, Rich Ricci and Chris Lucas, in the wake of the interest-rate fixing scandal.
Analyst Justin Urquhart Stewart, director of City firm 7 Investment Management, said Mr Agius was an ‘honorary sacrifice’ for Barclays.
Another analyst said ‘throwing Agius to the wolves will not save Diamond’.
Along with rivals HSBC, Lloyds and Royal Bank of Scotland, Barclays was also last week found guilty of exploiting thousands of small businesses by mis-selling complex loan deals.
MARCUS AGIUS'S RESIGNATION STATEMENT
Stepping down: Mr Agius leaves No 10 Downing Street after a business ambassadors meeting in January
'Barclays has been well served by an excellent executive team – led, first by John Varley, and now by Bob Diamond – which has worked constructively with a strong and supportive board of directors. Barclays has remained resilient throughout the crisis, and has worked hard to ensure that today it is a strong, well capitalised and profitable business.
'But last week's events – evidencing as they do unacceptable standards of behaviour within the bank – have dealt a devastating blow to Barclays' reputation.
'As chairman, I am the ultimate guardian of the bank's reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside.
'The board has also agreed to launch an audit of our business practices.
'This audit will be led by an independent third party reporting to Sir Michael Rake and a panel of non-executive directors.
'It will have three objectives:
- to undertake a root and branch review of all of the past practices that have been revealed as flawed since the credit crisis started and identify implications for our business practices and culture going forward;
- to publish a public report of its findings; and
- to produce a new, mandatory code of conduct that will be applied across Barclays.
'I am truly sorry that our customers, clients, employees and shareholders have been let down. Barclays is full of hard-working, talented individuals whose integrity is not in question.
'It goes without saying that Barclays will continue to have my wholehearted support in the future.'
Tactical move? Mr Agius's resignation appears designed to try to ease pressure on Barclays' chief executive Bob Diamond, who earned £18million last year as Britain's highest-paid bank boss
Lord Turner, the chairman of the Financial Services Authority, the City watchdog, described it as ‘a very black week for the reputation of British banking’.
Ed Miliband has called for a judge-led public inquiry into banking along the lines of Lord Justice Leveson’s into media standards.
He is expected to suggest the Government’s reluctance to do so stems from the Tories’ closeness to leading figures in the City, many of whom donate money to the party.
A Government source said: ‘We are examining the best way to review professional standards for bankers. I think a full bells-and-whistles Leveson-style inquiry is unlikely, but there will be significantly more than just an inquiry into Libor.’
VIDEO: Ed Miliband demands full-scale independent inquiry
http://www.dailymail.co.uk/news/article-2167239/Bob-Diamond-refuses-quit-Barclays-chief-resignation-chairman-Libor-rate-fiddle.html
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