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 Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    -1

    Comment number 30.

    Did anyone notice the Iraq inquirey being put back another year .
    the wheels may grind small but they grind very very slow .

    And labour are masters of swerveing out of these setups .

    Something quicker and more effective is needed .

    So the bankers and polititions at fault can be highlited and then the police given all the info for prosecution .

    It still lands in Balls lap at some point .

  • rate this
    +1

    Comment number 29.

    #25
    #16
    Plausible deniability, the world runs on it,

    -------

    Doesn't seem very plausible to me.
    --
    It is plausible, if you believe in the plausibility of it.
    -----
    Are you fishing for applause?

  • rate this
    +3

    Comment number 28.

    It is obscene to apply the word 'innocence' to these greedily thieves and an insult to the public's intelligence. They were all aware of their criminality and the game was to make sure you didn't get caught. Now I know what scum of society actually look like - and where they can be found. Doubt if public opinion will get to the truth. There's always 'investigative' journalism, I suppose...

  • rate this
    +4

    Comment number 27.

    Looks like the Diamond note, is the equivilant of the Bob Ritter memorandum in Clear and Present Danger by Tom Clancy.

    Seems to be now a clear chain of culpability from Tucker downwards in this gruby scheme.

    How the FSA have cleared any of the individuals is mind boggling!

  • rate this
    +2

    Comment number 26.

    Why is David Cameron so against a public inquiry ?
    The Tories were not in power at the time or is it he knows some thing that will hurt the Tories or him if it comes out in a public inquiry

  • rate this
    0

    Comment number 25.

    23. Richard Morris
    3 MINUTES AGO
    #16
    Plausible deniability, the world runs on it,

    -------

    Doesn't seem very plausible to me.
    --
    It is plausible, if you believe in the plausibility of it.

  • rate this
    0

    Comment number 24.

    @7.ThePog7

    Isn't that how news / "current" affairs works? It's all about what people are talking about or concerned about now.

    For sure, there's more worms to come out of the woodwork, but most people are focussing on that right now.

    But It'll probably get distracted off the agenda by the Olympics and /or this week's seach for a new Jesus on ITV!

  • rate this
    +2

    Comment number 23.

    #16
    Plausible deniability, the world runs on it,

    -------

    Doesn't seem very plausible to me.

  • rate this
    +4

    Comment number 22.

    It all goes to show that we are too dependant on the financial sector because we are permanently indebted to them as a result of our debt-money system. "The borrower shall be servant to the lender," so the saying goes. And it's true. The sooner we get proper monetary reform (and make the banks into a financial services sector) the better. Anything else is just rearranging the deckchairs.

  • rate this
    +11

    Comment number 21.

    Corruption in Anglo-Saxon was thought to be mild. It seems the higher up the more prevalent to filth. Shame on them. And shame on their patronizing, condemeaning manners. Too jail with them and give all decent honest people a chance. But then who'll be the law makers?

  • rate this
    +32

    Comment number 20.

    It's becoming clear that the whole political, economic & financial system is riddled with corruption & criminality. That there is yet no serious resolve to tackle the scale of the rot says a lot.The fact that politicians, press and police have clearly been complicit and/or incompetent in dealing with corruption in high places begs the question of who we can actually trust to sort the mess out.

  • rate this
    +1

    Comment number 19.

    It would be a good thing if David Cameron did a U-Turn on the Banks inquiry by MPs and make it a full Public Inquiry so all the dirty washing comes out and is not hidden in parliamentary privilege

  • rate this
    +2

    Comment number 18.

    @ ThePog7

    Bile? What bile?
    He's reporting a hearing of the Treasury Select Committee.

    Cooperation? You mean Barclays expecting respect for snitching on the other bad boys? They've already had a discounted fine - this isn't the USA.

    Should we not mention Protium...

    Feeling sorry for the FSA too? Do tell....

    Or are you worried the poor bankers wont be able to survive on their pay offs/pensions?

  • rate this
    +2

    Comment number 17.

    All this blows the cover on poor and unprofessional management that is rewarded to fail and on the essential impotence of regulators. This argues strongly for an exemplar in the market which is state owned and controlled which have polices to serve the national and consumer interests. Yes of course there wont be a proper independent professional enquiry because it would expose the true corruption.

  • rate this
    +3

    Comment number 16.

    Plausible deniability, the world runs on it,

  • rate this
    +7

    Comment number 15.

    Still many points that do not make sense:

    1) If JdM admitted to instructing people to (probably) break the law, why was he still around to be able to resign. Why was he not frogmarched off the premises?
    2) Ditto the compliance officers that let this through.
    3) Do they really expect us to believe that JdM at no time fed back to Bob that the BoE instructions had been implemented?

    ... and so on.

  • rate this
    +8

    Comment number 14.

    Is anyone really surprised? Those at the banks believe they exist as far above the law as the stratosphere from Earth.

  • rate this
    +3

    Comment number 13.

    You can see very clearly why our PM will not sanction a judicial inquiry as we plebs are not to know the full extent of what was going on and what else there is hiding in the cess-pit created by the bankers...and others.
    And now it looks as if the oil industry may have lots to hide.
    So are they all honorable men!

  • rate this
    +3

    Comment number 12.

    It is nice to know how people at the top of the banks tell people lower down to do some thing on the phone then send a Email to cover them to say they did not tell them to do it We need a full inquiry in to the banks so we can see the full extent of there tricks and how much they have cost us all No Mps inquiry will come out with the whole truth as they have no real sanctions to control the banks

  • rate this
    +1

    Comment number 11.

    Is there anyone left, anywhere, that believes Barclay's in unique -- or even mildly unusual -- in "bending the rues" and "gaming the system?"

    But perhaps it's better that they bend things a bit than invent ways to circumvent the rules entirely by innovating new (and regulation-free!) financial products.

    The ultimate way to game the system is to be "too big to fail." And they've done that.

 

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