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
    -9

    Comment number 150.

    I cannot for the life of me understand why we air all this dirty laundry in public. It does immeasurable damage to UK business, Barclays themselves and our reputation abroad. We seem hellbent on destroying the City and yet we are the shareholders!
    Any business in this situation would deal with it "behind closed doors" - they certainly wouldn't want to tell all their customers.

  • rate this
    +2

    Comment number 149.

    # 143 - the thrust of the Today discussion was about regulatory failure which is absolutely right. FSA, BofE, the BBA and the external auditors to the large banks are all implicated in the Libor debacle and heads should roll. FSA's failure is particularly relevant and Lord Turner a few others should now be devoting time to keeping their gardens neat and tidy.

  • rate this
    -1

    Comment number 148.

    Yes the people should be punished- but this whole thing is being blown way out of proportion by politicians and the media!

    We pay silly 2nd rate footballers more than the bankers! Aren't we taught to be competative and push the limits. 'Who Dares Wins' - us Brits thrived on risk taking throughout history!

    Why isn't HSBC CEO being asked to resign- people murdered for Mexico drugs money!?

  • rate this
    -6

    Comment number 147.

    Show me one "honest taxpayer" who has never paid cash to a tradesman or bought a lifestyle with cheap credit.

    People who suffered from LIBOR lowballing - do an honest thing and pay back the interest you were not charged.

    Some people broke the rules, they will be punished. Most people's suggestions for new world order would be more credible without the spelling mistakes.

  • rate this
    +2

    Comment number 146.

    143 Probably because the CEO between 2004 and 2005 and Chairman of HSBC from 2005 until 2010 just so happens to now be a government minister at the DTI. Being a politician , just walking is not in the DNA.

  • rate this
    +3

    Comment number 145.

    It is blatantly obvious that someone is lying.
    It is also blatantly obvious that only a judicial enquiry will get to the bottom of this & enable the perpetrators to be jailed.
    The politicians want a parliamentary enquiry because it would offer some degree of cover from the consequences of what is likely to be disclosed in a judicial enquiry. Start building more prisons Dave.You're gonna need 'em.

  • rate this
    +11

    Comment number 144.

    143.sanity4all

    99% Citizens try and do right thing and what have they to show for it NOTHING

    Bankers seem to think Crime Pays and given what has recently come out Crime seems to Pay

    Unless we all make a Stand and Demand Assets be striped from those who have profitted from Bonus after Bonus

  • rate this
    +4

    Comment number 143.

    As you said on Radio4's Today 'Barclays been pilloried' on this matter. There were other banks involved'. HSBC is in the headlines for persistent money laundering between 2004 and 2010, one wonders the effect drug cash flows had on death rates in Mexico and why HSBC chief exec hasn't walked already, as per Barclays and Libor.

  • rate this
    +11

    Comment number 142.

    when i push the limits like that, its called fraud and i go to prison.
    same rules do not apply to the rich.
    WHY?

  • rate this
    +1

    Comment number 141.

    "Some will say that shows the FSA is not, to use the cliche, a joined-up organisation"

    Some might. Most others will say the FSA is ineffective, incompetent and colluding. They haven't done their job.

    http://www.ft.com/cms/s/0/749328c2-cf32-11e1-a1ae-00144feabdc0.html

  • rate this
    +11

    Comment number 140.

    Compliance Officers - having been one I can tell you that the people making it to the top of that pile are the 'Del Monte' ones. 'Self-regulation' is a farce as management tends towards malleable compliance officers. Regulation takes a back seat to profit then likelihood to be caught, I can't remember the amount of times I was overruled.. didn't have much of a career, not a bad thing in hindsight.

  • rate this
    +4

    Comment number 139.

    112.Andrew Morton

    Asset Stripe them all of all the money paid to them over the years is the only way to Fix this.

    After all a Bank re-possess all the time.

    People Make a Stand

    Government Cuts or

    Solve Government Deficit problem Asset stripping all Billions paid Bankers who have Defrauded for years and Years

    Osborne people may respect you Take from those who have stolen

  • rate this
    +1

    Comment number 138.

    137.mattmatt81

    "The no responsibility culture came from the very top .

    ie Blair , Brown and Balls."

    Don't you mean Gulliver, Hester, Horta-Orsorio, Diamond?

    Seems a little odd to blame the former henchmen and ignore both the bosses and current henchmen.

  • rate this
    -5

    Comment number 137.

    The no responsibility culture came from the very top .

    ie Blair , Brown and Balls.

    All have caused far more damage and refused to acknowledge it

  • rate this
    +5

    Comment number 136.

    Old school tie establishments collide with unregulated global competitive banking! In Britain 'old school tie' wins!

    Every day you see people pushing the limits (on the roads for instance!)- except when policed!

    Where was the FSA, BoE or BAA!? They didn't get where they are by 'rocking the old school tie boat'. All the bankers pushed the limits because they were allowed to!

  • rate this
    0

    Comment number 135.

  • rate this
    +3

    Comment number 134.

    When a child or a dog push their limits they are put in thier place. It produces better, happier children and dogs. Give in to 'you don't love me' or big round eyes and the future is not good. But that is exactly what governments and regulators have been doing with the banks. Select Cttes have proved to be very ineffective in the role too. The OCCUPY lot were more right than they realised.

  • rate this
    +2

    Comment number 133.

    The Treasury Select Cmt members are rude and unprofessional in their questioning. I was very please when that MP called MANN was told to curb- it! If this is the best we've got + silly BAA & FSA- 'Merve the swerve' BoE - then I'm affraid we'd be better off relocating to Iceland (or even Greece- it's warmer there!).

  • rate this
    +4

    Comment number 132.

    Why did the FSA approve del Missier's recent appointment? It is clear he actions called into question his integrity. If there was any doubt, they should not have approved him and should have forced him out of his previous role. The regulators need to take a ZERO TOLERANCE approach to misdemeanors in the City. Sending strongly worded letters is not enough. Regulators must be "men" not "mice"!

  • rate this
    0

    Comment number 131.

    The members of the Treasury Select Cmt are useless!
    The FSA, BoE and BAA are too! The media blow-everything out of proportion - trial by media!
    DIAMOND probably thought the FSA failed his jerk test.
    US don't even look after their peoples health- but we Brits sure like to bitch & moan!


    LIBOR wasn't affected by Barckays in anyway - especially in this country.

 

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