Barclays’ chairman in firing line

 
Barclays HQ in Canary Wharf Barclays' share price has dropped drastically following the LIBOR scandal

The news first: an influential shareholder tells me investors may demand the resignation of Marcus Agius as chairman of Barclays.

The main reason, he says, is that the bank may need a cultural overhaul, and investors are not persuaded Mr Agius - who is also a non-executive member of the BBC's executive board - is the right individual to oversee this.

If that seems unfair, in that many would say the chief executive Bob Diamond is more responsible for the mess Barclays finds itself in, this investor would not necessarily disagree. But he feels that Diamond is in many ways an able chief executive, and replacing him will be much harder than finding a new chairman.

The investor has also told Barclays that it needs to appoint someone to conduct an independent review of what went wrong at the bank, focussed in particular on whether the culture of the bank has been sufficiently reformed.

He says Barclays must make a statement in the next 48 hours or so about how it intends to make sure there can never be a repeat of the debacle.

The pressure on Mr Agius and Mr Diamond intensified when Barclays' shares dropped like a stone earlier today: at one point it was 18% lower. "We are very worried that, in a general sense, the wrongdoing that has been identified has imperilled its licence to operate" said the investor.

Paying a price for co-operation

So is there any reason to feel sympathy for Barclays, following the tidal wave of opprobrium that has hit it, after its admission that it tried to rig important interest rates?

That is what I asked a regulator involved in the multi-jurisdictional investigation of banks involved in setting these bank-to-bank rates.

The answer I received was that he understood the public anger.

But he said Barclays could perhaps be seen as having paid a price for having co-operated with the probe - in that it is the first to pay a whopping fine and settle, so it has attracted all the (terrible) publicity.

Other banks, said the regulator somewhat archly, "are not co-operating".

So as and when the regulators reach their verdicts about these uncooperative other banks, would we think Barclays was the worst of the lot?

Probably not.

What Barclays traders did in trying to manipulate the rates was widespread and pervasive in the banking industry. "I don't think Barclays will be seen as an outlier, either much better or much worse than the others", said the regulator.

For what it is worth, we know that Deutsche Bank of Germany, Switzerland's UBS, America's Citigroup, and - from the UK - RBS, Lloyds and HSBC are all being investigated.

If they were all at it - and that is an if - does that mean those calling for Mr Agius or Mr Diamond to go are wrong?

Regulators looked for evidence to pin personal responsibility for the scandal on Mr Diamond, and failed to find it. The official verdict is that the rules were broken by traders working for him, but he didn't know.

That said, at the relevant time, 2005-9, he had huge autonomous control over the business where most of the wrongdoing took place, Barclays Capital.

One of his colleagues described the failure to me as a "colossal failure of culture - bankers, obsessed with generating short-term profits and bonuses, ran amok".

So the reason Mr Diamond is under pressure is that he was the captain on the bridge when that culture was prevalent - and, some argue, he encouraged it.

Mr Diamond would say that in his new role as overall boss of Barclays, he is trying to create a different culture, one where remuneration is not dependent on turning a quick buck.

That said, some would say he is unlucky that at two of the other British banks expected to be punished, Lloyds and RBS, the chief executives - Stephen Hester and Antonio Horta-Osorio - were elsewhere when the alleged wrongdoing took place.

There is an interesting nuance at HSBC. Its chief executive, Stuart Gulliver, ran HSBC investment - like Mr Diamond - when Libor was being manipulated (to be clear, we don't yet know whether HSBC was in on this, though it is being probed).

But here is a resonant fact: the executive chairman of HSBC at the relevant time, Stephen Green, is now Lord Green and works for the prime minister as a minister.

David Cameron was this morning highly critical of Barclays' conduct in the Libor market. If HSBC is tarred with the same brush, will Lord Green's position in the government be sustainable?

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

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  • rate this
    0

    Comment number 336.

    It seems Diamonds are for ever. Alas.

  • rate this
    0

    Comment number 335.

    If you take the big pay, then you have to take the big responsibility. What these people did was absolutely shameful - if Management know about it, then they are equally, if not more accountable. If they didn't know then that's probably an excuse on moral grounds, but is still shameful incompetence bordering on negligence.

  • rate this
    +1

    Comment number 334.

    @DavidCheslin The top executive of any company is ultimately responsible. He should be aware of what is going on at a lower level. That is why they are supposedly paid so much. It's called accountability.
    he should resign, and in the same vain, so should Rupert Murdoch

  • rate this
    0

    Comment number 333.

    here is an article from the 16 June http://rt.com/programs/keiser-report/episode-302-max-keiser/ makes good listening

  • rate this
    +1

    Comment number 332.

    When the minions working for Barclays make it a huge profit Diamond has no problem taking the resulting bonus on the grounds that he is 'in charge'. Now they have been caught acting illegally he should take the consequences. Those consequences are NOT resignation, they are IMPRISONMENT. The guy and the rest of the board need to be locked uo.

  • rate this
    +1

    Comment number 331.

    BD is not indispensable!! The world will not fall apart!! and having another person who comes from outside the market, is less greedy and focuses on corporate standards and ethics, and procides customer service FIRST will be good for banking. He along with Agiul must go!! and the rest of the board and all in banking will have to work hard without bonuses to gain ANY public credibility.

  • rate this
    +1

    Comment number 330.

    Diamonds FSA letter seems to indicate that, while he knew nothing, the traders were acting in the best interest of the bank. I'm reminded of a Kenny Everett character " I did it in the best possible taste"

  • rate this
    +3

    Comment number 329.

    @324 'NickyN'

    ~~
    Good post NickyN. It's clear that Bob Diamond misquoted. He should have said "personal integrity is about what you do when no-one is watching"

  • rate this
    +2

    Comment number 328.

    "Diamond is in many ways an able chief executive, and replacing him will be much harder than finding a new chairman." yet " the rules were broken by traders working for him, but he didn't know." . The Murdoch defense.

    I clearly don't understand what an able executive is- someone that hasn't a clue what is going on his organisation ?

    And people are paid very well for this level of incompetence!

  • rate this
    +1

    Comment number 327.

    Unfortunately the banks are out of control and nobody dare face up to them. They can (and will) do what they like.They 'are too important to the British economy' and if we try to get them to act responsibly 'they will go abroad'. It seems they have us all by the proverbials. I heard that Bob won't be asked to resign because 'he is too difficult to replace'! Since when was that a factor in guilt?

  • rate this
    +1

    Comment number 326.

    325. David Cheslin "I really don't understand why Bob Diamond should resign."

    Mr. Cheslin has clearly not been in business for himself. When I was proprietor of a company, if my employees made a mistake serious enough to have to report to a customer, I assumed full responsibility. If you blame your employees it is tantmount to admitting "I employ idiots". In Diamond's case, "I employ criminals."

  • rate this
    -2

    Comment number 325.

    I really don't understand why Bob Diamond should resign. He's just what Barclays needs at present.Do we imagine the other 20 or so banks probably involved in this LIBOR scam will be forced to resign too?

    And does any boss know exactly what an employee is doing on his computer? Let's get real. I am all for those who actually typed and read the emails re this incident being put before a court.

  • rate this
    +2

    Comment number 324.

    Bob Diamond has been quoted (Financial Times) as stating in a lecture last year that "Culture is difficult to define, but for me the evidence of culture is how people behave when no one is watching.” As the FT commented "Now we know" what the Barclays definition of culture is.

  • rate this
    +1

    Comment number 323.

    My recollection of the Leeson affair is that after the shenenigins of the lowly Leeson broke, the entire board of Barings resigned.

    But they were made of different stuff from the wide boys of today's City bandits.

  • rate this
    +2

    Comment number 322.

    If any one on benefits had done such things they would be in court and jail with in weeks of getting caught and left with a bill to repay all there ill gotten gains or but now we are talking about bankers who are beyond us merer mortals they have all the right friends in the right places to make it look like not that important to get upset about and a small slap on the wrists is all that is needed

  • rate this
    0

    Comment number 321.

    307.philmus

    No you can not call it the offence called fraud as a Fred the Shred as been done from the middle upwards

  • rate this
    +1

    Comment number 320.

    I am very angry with the latest revelation about Barclays fixing libor rates and even more incensed at Bob Diamond refusing to resign .I have to say Banks look to me like crooks in suits and get away with it time and time again .Why when we as mere citizens are more and more regulated do bankers ,pigs at the head of the trough ,continue to rip the ctizens off .

  • rate this
    +3

    Comment number 319.

    316.KBO
    You missed the fact that Bob Diamond was the man in charge at Barclays investment arm and the man that the staff in that department answered too directly All the banks told us that they had put in place checks and balances on there traders after Barings Bank collapse in 1995 it is clear they did not or the order was coming from the top on I don't know any thing if we get caught at it

  • rate this
    +3

    Comment number 318.

    Its almost as if the bankers were watching Murdoch and co at Leveson and thought wow, this "rogue employee" & "I didn't know" stuff really gets you off the hook.
    I bet Bob never read his emails either, and has a terrible memory for meetings.

  • rate this
    +2

    Comment number 317.

    In what way is Bob Diamond an able chief executive? Has something gone well at Barclays under him?
    Oh yes, sorry, the bonus scheme is working every nicely isn't it?.

 

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