Barclays' 'culture of pushing the limits'

 

Libor scandal: Del Missier 'instructed' by Bob Diamond

Jerry del Missier's evidence to MPs, coupled with that of Andrew Bailey of the FSA, reinforced what many will see as a depressing picture of Barclays as a giant global bank with pockets of severe rot in its culture.

The former number two at the bank - who resigned just under a fortnight ago - said that he was unaware of systematic lying over several years about the interest rates the bank was paying by traders who worked for him.

For Mr del Missier, this represented "control failures" on his and the bank's part.

He also revealed that when the bank's compliance officers - its internal policeman - were told in the autumn of 2008 by the money-market desk that the Bank of England had instructed Barclays to understate its borrowing costs, none of those internal policemen bothered to check out whether such an instruction had actually been given.

As for the FSA's Mr Bailey, he said that earlier this year he lost patience with what he saw as a habit at Barclays of gaming the rules, or trying to get round them by sticking to the letter but not the spirit.

Mr Bailey said of Barclays: "There was a problem with this institution and the problem came from the tone at the top".

Start Quote

I relayed the content of the conversation I had with Mr Diamond and fully expected the Bank of England views would be fully incorporated in the Libor submission”

End Quote Jerry del Missier Former Barclays executive's evident to MPs

The FSA's chairman, Lord Turner, saw this problem as "a cultural tendency to be always pushing" the limits of the rules.

Mr Bailey agreed that meant Bob Diamond, who recently resigned as chief executive of Barclays, was not taking sufficient steps to clean up the bank.

What for many will be the most striking element of Mr del Missier's testimony was his clear recollection that Bob Diamond, in a telephone call, had passed on an instruction from the Bank of England to lie about the interest rates Barclays was paying.

That is world's apart from what Paul Tucker, deputy governor of the Bank of England, says he conveyed to Mr Diamond - and differs from Mr Diamond's recollection. Both deny that any such instruction was given.

MPs were understandably bemused by how there could be such extraordinary misunderstandings of such a highly sensitive issue by three such senior City figures.

As for the FSA, there is an apparent contradiction between its lecturing of Barclays to clean up its culture earlier this year and the approval it gave for the promotion of Mr del Missier to be Barclays' number two. That approval was given just days before Barclays incurred record fines and penalties for Libor wrongdoing - which in turn prompted Mr del Missier to resign.

Some will say that shows the FSA is not, to use the cliche, a joined-up organisation, since it was aware Barclays would be severely punished for lying about interest rates.

But, of course, the embarrassment is greatest for Barclays, which is fast losing what is as important to a bank as capital to absorb losses, namely a reputation for integrity and competence.

Unsurprisingly, Barclays' shareholders and regulators are telling the banks' board that in replacing its chairman and chief executive, one of those important jobs must be filled by an outsider.

 
Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    +17

    Comment number 10.

    Thank you for the coverage. I fear much such goes on across the industry & around the globe, in various departments & permutations.I for one thank all those who have made it their mission to put an end to such egregious misconduct once & for all.The agony will not all have been for naught if we collectively seize the chance to clean up the mess & replace the miscreants with better, honest people.

  • rate this
    +3

    Comment number 9.

    Not heard much about any names in the frame to follow Bobby at Barclays as CEO. Some suggest it's a poisoned chalice and that some are saying a definate 'no thank you' to it.

    Between the banks and G4S, how can anyone be asked to take British businesses seriously?

  • rate this
    +3

    Comment number 8.

    Is Barclays now ex-chairman still on the BBC board of governors?
    Just a thought. 'Del Boy's testimony was always going to be the most telling, in more ways than one.

  • rate this
    -13

    Comment number 7.

    Peston, will you be writing similar articles about every other bank when their wrongdoing comes to light? Or are you taking the ludicrously easy (and frankly wrong) route of focussing your bile on the only bank to so far have cooperated with the regulators?

  • rate this
    +2

    Comment number 6.

    As somebody mentioned the libor and PPI are just the tip of the iceberg, seems like it was not just a few "rogue" trades but was indemic within the whole sector. Just wait till the derivatives bomb hits us.

  • rate this
    +2

    Comment number 5.

    http://www.bbc.co.uk/news/business-18856018

    Who isn't pushing the limits?

  • rate this
    +14

    Comment number 4.

    This has all the hallmarks of either a conspiracy and subsequent cover up at the highest level of government and the financial 'establishment' or an almost unbelievable degree of incompetence by the same parties. It is barely credible that these same people were unaware of what was going on with Libor. This governments reluctance to have a judicial enquiry just reinforces these views.

  • rate this
    +5

    Comment number 3.

    Are we getting close to a criminal conspiracy here? If so, are those big bonuses (and paycheques) proceeds of crime which could be recovered by SOCA?

  • rate this
    +23

    Comment number 2.

    Those of us on low incomes and some savings are paying for these greedy clever dicks' gambling debts with interest rates close to zero and actual inflation of about 5%.

  • rate this
    +13

    Comment number 1.

    What is amazing is that it doesn't seem to have occurred to them that what they did was at least bending the rules and that they would get found out. They have either lost contact with reality or really believed themselves to be gods.

    Sad to see that they have reduced once trusted institutions into by-words for greed, decadance and nation wrecking.

 

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