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
    +4

    Comment number 290.

    Oh woe is the banking industry! So many rules to remember. So much regulation. Such hard work to keep on top of it. No wonder bankers are 'worth' so much, even if they do occasionally make a little error or two and tank the world economy, destroy millions of jobs and push billions into poverty. Oh woe!

    Nobody else has to deal with bureaucracy. Such unfair criticism.

  • rate this
    0

    Comment number 289.

    Basel II banking regulations is a classic example of ever greater regulation having sign unintended consequences. Leg was intended to avoid crises like US S&L disaster by est common set of global banking standards (incl cap adequacy using mark to market) & intensive risk management using standard methodology (VaR). It was/is a disaster.

  • rate this
    +3

    Comment number 288.

    Mr Cameron has full confidence in Mr del Missier - unless, he's the fall guy.

  • rate this
    +4

    Comment number 287.

    Manipulation of self-certifying of oil & precious metals could be having huge impact on assessing real health of financial institutions, economy, & individual investors. There have also been allegations self-certifying DERIVATIVES indicator – iSwap – has been MASSIVELY MANIPULATED.
    It seems safe to assume that most self-certifying markets are gamed.

  • rate this
    +3

    Comment number 286.

    "The BBA was also aware at the time of rate manipulation at Barclays, according to the US CFTC, as a senior manager informed the body that the bank was not "clean-clean".

    It is yet unknown whether the BBA had notified the Bank of England, and if not, why."

    erm, I know, for those of you wondering if Angela Knight and the cronies would ever, ever, ever be hoisted... this might just be the petard.

  • rate this
    +2

    Comment number 285.

    Absurd to suggest that lots of rules means anything when there is clearly no intention to attempt to ensure compliance
    Parallels with uber effective HMRC, Board members who reside on other Boards, in Guernsey, or luncheon voucher Hartnett

    Anyone would think our country's integrity is on a par with Turks&Caicos, but that can't be the case because we're funding their corruption investigations...

  • rate this
    +4

    Comment number 284.

    Dont expect much out of the regulators - as said before on this thread, 3 years LIBOR investigations isnt a reflection on complexity Its a reflection of incompetence. I have seen how regulation is carried out (or isnt) and its farcical. Hundreds of Millions in fines against struggling banks isnt a solution. Criminal proceedings against those who perpetrated & those who allowed it is whats required

  • rate this
    +4

    Comment number 283.

    Looking at Mr del Missier's picture above,
    I would think he looks like a man who has
    been "Set Up" good & proper & knows it !
    He's just a fall guy . . . .
    Clearly, there have been failings all round
    but most of the questions seem to lead to . . . Bob.

  • rate this
    +5

    Comment number 282.

    271. ARHR "Tripartite Regulation - no one is responsible!"

    You are ignoring the fact that HM Government stand above Tripartite Regulation.

    HMG IS without doubt inescapably responsible.

    Just as they were in the Equitable Life case.

    It follows that the Govenrment IS responsible and thus MUST redress the consequences of it responsibility!

    My calculations (earlier) come to £150 billion redress!

  • rate this
    -10

    Comment number 281.

    Having no economic growth is a price well worth paying for the pleasure of sticking it to those greedy corporate types.

    We're nearly done with Barclays - who next?

    HSBC
    Glaxo
    G4S ...?

    I'm sure if you dig deep enough there’s someone at Rolls Royce, BAE Systems or JCB who once filled a form out wrongly.

    Great effort all round, keep up the good work.

  • rate this
    +5

    Comment number 280.

    2011, Commodity Exchange (COMEX) & NY Mercantile Exchange (NYMEX) advised CFTC they had approved JPMorgan’s app to become licensed vault facility, using “self-certification” process. Newly licensed vault = both “weighmaster” & depository - gold, silver, platinum & palladium. Facility is “self-certifying” = no third party audit. JPMorgan allegedly CAUGHT misreporting allocated metals.

  • rate this
    +3

    Comment number 279.

    #257 BBA
    The suggestion of light tough is betrayed by the size of FSA rule book & by proliferation of compliance depts in firms
    ----------
    I bet the battalions of professional corporate rule benders/breakers are terrified when the man from the FSA flashes the size of his rulebook around the office.

  • Comment number 278.

    All this user's posts have been removed.Why?

  • rate this
    +1

    Comment number 277.

    I agree with 272 & 273
    Investigation has to go further, and they should not get away with it.
    I do not really see more rules being useful. there has been no enforcing of existing regulation where there should have been.
    I point out in earlier links where litigation will drive further investigation,
    this is not the best approach but at least it is happening.

  • rate this
    +4

    Comment number 276.

    274 B#1 "our banks are accused of are petty offences"

    So robbing people of £150 Billion is a 'petty' offence!

    I'd like to know what you consider to be a serious one?

    At present we are only seeing the minions (Diamond/Messier etc.) they did what they were told to do.

    The real crooks are the ones who orchestrated & sat by & watched the robbery.

    The Regulators - THE BANK OF ENGLAND (&FSA)!

  • Comment number 275.

    All this user's posts have been removed.Why?

  • Comment number 274.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +4

    Comment number 273.

    P. Tucker told MPs Barclay abuse of Libor may be only part banks’ dishonesty, suggesting other markets should be investigated. Official inquiry into Libor should be broadened to include several other markets where banks SELF REPORT. Expansion = other interest-rate-related data as well as complex financial instruments.
    Look out: Some markets in gold & oil are also based on self-reporting.

  • rate this
    +4

    Comment number 272.

    268 - So - let them break the law, steal our money, destroy whats left of this country's good name, asset strip our industry and **** our savings and pensions up the wall.

    We can't allow any of it to become common knowledge can we? Might frighten the mug punters who still think that a suit and My Word Is My Bond mean something

  • rate this
    +2

    Comment number 271.

    BofE and FSA evidence to the Treasury Select Committee was unacceptably weak. Once again it was all wisdom after the event. The public deserves better. That the Libor investigation has taken 3 years is not evidence of its complexity - rather the ineffectiveness of regulatory oversight in 2008 and earlier. Tri-partite regulation - no one is responsible!!

 

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