Home Business Bob Diamond, Barclays Bank boss, says he will not resign

Bob Diamond, Barclays Bank boss, says he will not resign


Bob Diamond, the boss of Barclays Bank, has insisted he will not resign after staff rigged the key lending rate between banks.

Bob Diamond was speaking at a meeting of analysts at US bank, Morgan Stanley.

And in a letter agreeing to give evidence to MPs, Bob Diamond condemned the inappropriate behavior of a “small number” of employees who had tried to make profits for their own benefit.

On Thursday, PM David Cameron said the bank’s management faced “serious questions” after it was fined £290m ($450 million).

Some MPs – including Tories Steve Baker and Nick De Bois – have suggested Bob Diamond should resign and former Liberal Democrat leader Paddy Ashdown said his position was now “untenable”.

Meanwhile, Barclays and other banks face the threat of criminal investigation in the UK over the scandal.

Royal Bank of Scotland has said that it expects to reach a settlement in a few months. One report said the bank faced a fine of £150 million ($240 million) for market manipulation but RBS said it did not recognize that figure.

Bob Diamond, the boss of Barclays Bank, has insisted he will not resign after staff rigged the key lending rate between banks

Bob Diamond, the boss of Barclays Bank, has insisted he will not resign after staff rigged the key lending rate between banks

In his open letter to Andrew Tyrie MP, the chairman of the Commons Treasury Committee, Bob Diamond pointed out that authorities found no evidence that knowledge of the manipulation, for which it has been fined $450 million, went any higher than “immediate desk supervisors”.

But he admitted that the bank’s control systems should have been much stronger.

He added: “When the trader conduct was first discovered by more senior management, steps were immediately taken to stop it, and it was reported to the authorities.”

Bob Diamond’s comments come after Prime Minister David Cameron said: “The whole management team [at Barclays] have got some serious questions to answer. Let them answer those questions first.

“Who was responsible? Who was going to take responsibility? How are they being held accountable?”

Labour leader Ed Miliband said those Barclays staff found to have committed the wrongdoing “should face the full force of the law”.

Bob Diamond also said that Barclays was now “completing a review of employee conduct for all those involved”, and that “all appropriate options will be pursued for those who have a case to answer, ranging from the clawback or withholding of remuneration to being asked to leave the bank”.

Barclays was fined $450 million on Wednesday by the UK and US authorities after an investigation into claims that several banks manipulated the Libor rate at which they lend to each other.

Investigators say that Barclays’ traders lied to make the bank look more secure during the financial crisis and, sometimes – working with traders at other banks – to make a profit.

Barclays had acknowledged that its actions between 2005 and 2009 had fallen “well short of standards”.

The scandal has hit Barclays shares, which ended Thursday trading down 15.5%.

Other banks shares also fell, with RBS losing 11.5%, Lloyds down 3.9%, and HSBC giving up 2.6%.

Meanwhile, Chancellor George Osborne confirmed that HSBC, RBS, Citigroup and UBS were also under investigation.

The Serious Fraud Office subsequently said it was in talks with the Financial Services Authority (FSA) about the case. This could result in UK criminal proceedings being brought.

The US Department of Justice had already confirmed that criminal investigations into “other financial institutions and individuals” were ongoing.

Barclays’ misconduct relates to the daily setting of the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).

These are two of the most important interest rates in the global financial markets and directly influence the value of trillions of dollars of financial deals between banks and other institutions.

They can also affect lending rates to the public, for instance with some mortgage deals.

The British Bankers’ Association asked the government on Thursday to consider taking over the regulation of how Libor is set.

The fine imposed on Barclays is part of an international investigation into the setting of interbank rates between 2005 and 2009.

Between 2005 and 2008, the Barclays staff who submitted estimates of their own interbank lending rates were frequently lobbied by its derivatives traders to put in figures which would benefit their trading positions, in order to produce a profit for the bank.

And between 2007 and 2009, during the height of the banking crisis, the staff put in artificially low figures, to avoid the suspicion that Barclays was under financial stress and thus having to borrow at noticeably higher rates than its competitors.

The FSA said Barclays traders were quite open about their routine attempts to manipulate rates.

“Requests to Barclays’ submitters were made verbally and a large amount of email and instant message evidence consisting of derivatives traders’ requests also exists,” the FSA said.

 

Clyde is a business graduate interested in writing about latest news in politics and business. He enjoys writing and is about to publish his first book. He’s a pet lover and likes to spend time with family. When the time allows he likes to go fishing waiting for the muse to come.