Barclays: Cameron says bank faces 'serious questions'

 

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Prime Minister David Cameron has said that Barclays Bank management has "serious questions" to answer over how it manipulated banking lending rates.

Barclays was fined £290m ($450m) after an investigation into claims that several banks manipulated the Libor rate at which they lend to each other.

The Chancellor George Osborne confirmed that HSBC, RBS, Citigroup and UBS are also under investigation.

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

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

Barclays had acknowledged on Wednesday that its actions between 2005 and 2009 had fallen "well short of standards".

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.

'Who was responsible?'

David Cameron: "The whole senior management team have got some big questions to answer"

Mr Cameron said "the whole management team 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?"

Business Secretary Vince Cable said that while it would be "seriously premature" to decide now whether Mr Diamond should be sacked, he added that the Government did have powers to disqualify directors.

"If the facts suggested action - and obviously we would be subject to legal advice; this is a legal process - then indeed that could well follow," he said.

In a statement to the House of Commons, Chancellor Osborne said: "The FSA report is a shocking indictment of the culture at banks like Barclays in the run-up to the financial crisis."

"Through 2005, 2006 and early 2007 we see evidence of systematic greed at the expense of financial integrity and stability and they knew what they were doing," he said.

Currently fines paid by banks help to bring down the levy other financial firms pay to run the regulator.

The Chancellor said the government is looking to change that to make sure the taxpayer benefits from the fines.

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An influential shareholder tells me investors may demand the resignation of Marcus Agius as chairman of Barclays”

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Labour party leader, Ed Miliband, said: "This cannot be about a slap on the wrist.

"The people that have done the wrong thing in this case should face the full force of the law... including criminal prosecutions."

The Serious Fraud Office later confirmed it was in talks with the 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.

Regulators say that Barclays manipulated how it reported the interest rates at which banks lend to each other to benefit their traders and financial status.

Tracey McDermott, director of enforcement at the FSA, which imposed fines alongside the US financial regulator, told the BBC that "we need to look at each case on its own particular facts but the initial indications are that Barclays was not the only firm that was involved in this."

George Osborne: "How were such failures allowed to continue undetected and unchecked?"

The current chief executive of Barclays, Bob Diamond, was also in charge of the unit where the manipulations occurred, and is now facing calls for his resignation. On Wednesday, he and three of his top colleagues said they would give up their bonuses this year.

However the Liberal Democrat peer, Lord Oakeshott, said that if Mr Diamond had any shame, he would resign.

Martin Taylor, who was Barclays' chief executive from 1994 to 1998, said the bank had engaged in "systematic dishonesty".

"It's hard to believe that a policy which seems to be so systematic was not known by people at or very near the top of the bank."

Andrew Tyrie, chairman of the Commons Treasury Committee, said it would summon Mr Diamond to account for what had happened.

Mr Diamond later confirmed that he would appear before the committee.

Mortgage deals

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.

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'Accepted culture'

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.

In one instance, a trader recounted a conversation in which he had "begged" the submitter to put in a lower Libor figure.

"I'm like, dude, you're killing us," he said. His manager replied, "just tell him to... put it low".

In turn, the staff submitting the data would respond to the traders' requests.

"For you…anything," said one. "Done… for you big boy," said another.

And: "I owe you big time... I'm opening a bottle of Bollinger."

 

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  • rate this
    +8

    Comment number 1992.

    Now that people are becoming aware that our entire society is based on exploitation, fraud, lies and violence I have to ask them.

    Do you feel obliged to honour the social contract?

  • rate this
    +2

    Comment number 1991.

    I agree that no boss can know everything but if your paid to carry the can you carry the can... whether you know about the shenanigans or not. That's the deal. If a boss does not want to be responsible he must state his desire for lower responsibility in ADVANCE in the contract and take a wage cut.

    Is it not just a big scam to fleece the plebs ? Is that what they call us in the boardroom ?

  • rate this
    +5

    Comment number 1990.

    1973. Yes New Labour shamelessly allowed tory deregulation culture to continue but it was the Tories who in the 80s allowed the shocking Big bang deregulation of the City commencing a cutlure of greed and wrecklessness. What is even more shamefull is the way the finance sector has been allowed to govern social policy under Tory and Labour. The Rich are a state within a state in Britain and USA.

  • rate this
    +2

    Comment number 1989.

    now we know why the made so much cash the did not pay there tax lock them up

  • rate this
    +8

    Comment number 1988.

    Is it just me, or does anyone else sense that our politicians are making the noises they have to, and no more?
    No Ministers talking of criminal investigations, rather the usual generic condemnations.
    IT COULD NOT BE THAT THE GOVT KNEW ABOUT THESE ILLEGAL PRACTICES, BUT DID NOTHING TO STOP THEM, COULD IT???

  • rate this
    +3

    Comment number 1987.

    The financial sector has been a running joke for the last few years and now the clowns want to ask serious questions...

  • rate this
    -8

    Comment number 1986.

    1947.
    Robbie

    I live in the UK, and I trust bankers, politicians and the police. So the answer to your question is yes.


    1948.
    le_frogster

    I entirely agree.

    The problem is that too many people in this country have etched into their brains automatic notion of 'NHS - good, Bankers - bad".

    If only people would wake up and see that both have their relative strengths and weaknesses.

  • rate this
    +2

    Comment number 1985.

    1948.the real prophet

    "Why is then the NHS...seem to be beyond reproach"

    You must be happy the NHS has been privatized then...I just hope you and yours never get seriously ill or require their services.

    Because guaranteed you will be rather disappointed it will be cash up front or come back when you have some, unless of course you are a Bupa muppet!

    If MP's have integrity, Bob is for the dock

  • rate this
    +3

    Comment number 1984.

    The heads of the FSA, on ridiculously high salaries at the taxpayers' expense, were asleep on the job....again! Or might it be that they have had cosy dinners with the heads of banks for years? I think it's time we find out. Any investigative financial journalist out there?

  • rate this
    -1

    Comment number 1983.

    Seems like David Ikye wasn't all wrong and that Alex Jones really does have his finger on the pulse?

  • rate this
    +6

    Comment number 1982.

    I fed up with the rich getting away with crime.

    No fines I want jail terms.

  • rate this
    +5

    Comment number 1981.

    Angela Knight is always wheeled out to dish out the spin and propaganda defending the UK's banking industry.

    Anyone heard or seen her lately?

  • rate this
    +3

    Comment number 1980.

    It is Simple You take the salary as the CEO you take the responsibility for the actions of your minions! If he did not know what was going on more fool him- well some other heads will role! If he did know well perhaps a few years in Jail would be a good idea. When is Parliment going to start representing the people and descipline these reptiles!

  • rate this
    +3

    Comment number 1979.

    Bob Diamond receives an obscene remuneration package and together with senior management should know about an irregularity of this magnitude. The manipulation was hardly likely to benefit anyone other than the banks themselves.
    The banks think that it is perfectly legitimate business practice to act fraudulently or recklessly at every opportunity if it serves their purpose.

  • Comment number 1978.

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

  • rate this
    +2

    Comment number 1977.

    Is this yet another scandal under the FSA stewardship of Hector Sants? I can see why he was keen to let everybody know that he's given his bonus to a charity.....cleansing of his soul before the dam burst. Unfortunately, though, it's burst before he leaves in July.

    Never mind, Hector, get in your boat and drift away.

  • rate this
    +3

    Comment number 1976.

    Interestingly this story is not mentioned on the current front page of the on-line Washington Post so clearly it's not news in the USA. However, they do have a story about the Loch Ness Monster! What's that tell us?

  • rate this
    +2

    Comment number 1975.

    Barclays fixing the Libor has many serious implications for society.

    Many people may have paid far too much interest due to its fixed rate.

    They then have to pay the fine that Barclays has just been handed.

    If it were Royal Bank of Scotland, the Taxpayer would be really confused ??????

  • rate this
    +3

    Comment number 1974.

    1949.shanalang
    we have a woefully ignorant populace whose only reason for taking it to the streets is order to steal a new pair of trainers
    -
    I have a feeling we're going to be seeing a lot of angry street protest this year, and will we all be saying how terrible it is when the "agents provocateurs" start smashing things? I doubt the banksters will get much sympathy when they become targets.

  • rate this
    -4

    Comment number 1973.

    As an employee for one of the banks named in this investigation I am absolutely distraught and disgusted that this has been allowed to go on. However, Mr Diamond will have had no idea that this was happening unless of course it was something he turned a blind eye to when he was in charge of said department. let's not forget it was Labour who presided over this accumulation and greed of the banks.

 

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