Barclays boss Bob Diamond resigns amid Libor scandal

 
Bob Diamond Bob Diamond's severance package has not yet been decided, Barclays says

Barclays chief executive Bob Diamond has resigned a week after the bank was fined a record amount for trying to manipulate inter-bank lending rates.

BBC business editor Robert Peston said he was encouraged to go by the heads of the Bank of England and the FSA.

Mr Diamond said he was stepping down because the external pressure on the bank risked "damaging the franchise".

Chief operating officer Jerry del Missier has also resigned, the third top executive in two days to do so.

Barclays chairman Marcus Agius, who had announced his own resignation on Monday, will now take over the running of Barclays until a new chief executive is appointed.

'Cynical greed'

BBC business editor Robert Peston said the heads of the City's two main regulators had been unable to force Mr Diamond out "because the recent FSA investigation into how Barclays attempted to rig the important Libor interest rates did not find him personally culpable".

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It is a soap opera like no other I can remember in my 30 years of reporting on the City”

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"However, as a regulated institution, it was impossible for Barclays' board to ignore the revealed wishes of the two most powerful regulators in the City."

Earlier, Lord Turner, the chairman of the Financial Services Authority, described the outrage that has built up over the bank's actions.

"The cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits - has justifiably shocked and angered people, in particular when we are facing hard economic times provoked by the financial crisis," he told the Financial Services Authority's annual meeting.

Committee appearance

How Libor scandal developed

27 June: Barclays fined £290m by US and UK regulators for attempting to manipulate Libor rates

28 June: Barclays shares plunge 15%

29 June: Bank of England governor calls for change in banking culture

1 July: It emerges that RBS has sacked four traders over Libor and there are calls for changes in the law to cover Libor-rigging

2 July: Barclays chairman Marcus Agius resigns and the government launches two inquiries into Libor and banking standards

3 July: Barclays chief executive Bob Diamond resigns

Mr Diamond will still appear before MPs on the Treasury Committee on Wednesday to answer questions about the Libor affair.

"I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question," Mr Diamond said in a statement.

He is expected to be questioned about a conversation he had with the deputy governor of the Bank of England, Paul Tucker, about Barclays' Libor submissions at the height of the credit crunch in 2008.

Barclays' managers came to believe, after the conversation between Mr Diamond and Mr Tucker, that the Bank of England had sanctioned them to lie about what they were paying to borrow when providing data to the committees that set the Libor rate.

Inquiry row

Chancellor George Osborne welcomed Mr Diamond's departure and said he hoped it was the "first step towards a new culture of responsibility" in banking.

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"It is the right decision for the country," Mr Osborne said, saying the UK needed a strong Barclays concentrating on lending and contributing to economic recovery.

Labour leader Ed Miliband said it was "necessary and right" that Bob Diamond stepped down.

"But this is about much more than one individual, it's about the culture and practices of the banking industry," he said.

"That's why we need a full, judge-led, independent inquiry, to get to the bottom of those practices and make recommendations for change in the future. We've had missed opportunities before, we've got to seize this moment."

Labour is critical of the government's decision to call a parliamentary inquiry, chaired by the head of the Treasury Committee, Andrew Tyrie MP, rather than a full Leveson-style inquiry, independent of politicians.

Big pay-off?

Last week, regulators in the US and UK fined Barclays £290m ($450m) for attempting to rig Libor and Euribor, the interest rates at which banks lend to each other, which underpin trillions of pounds worth of financial transactions.

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Libor is to banking what the Millie Dowler case was to phone hacking”

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Staff did this over a number of years, trying to raise them for profit and then, during the financial crisis, lowering them to hide the level to which Barclays was under financial stress.

Mr Diamond is one of the UK's highest paid chief executives, earning £20m last year, and was described as "the unacceptable face" of banking by the then business secretary Lord Mandelson in 2010.

The details of any severance package are not yet known, but former City minister Lord Myners suggests it could add up to £20m-£30m.

"I think his resignation letter is drafted with an eye to that [pay-off], because he admits no guilt on his part at all," the Labour peer told BBC News.

"The shareholders of Barclays will be expecting the board to ensure that not a penny more is paid to Bob Diamond than that to which he is legally entitled," he said.

US-born Mr Diamond was head of Barclays Capital, its investment bank division, when its staff were trying to manipulate the key inter-bank rates.

"He maintains that he didn't know what was going on," says Robert Peston.

Investigations are continuing in the UK and the US into other banks over Libor fixing, including criminal investigations by the Department of Justice. The Serious Fraud Office in the UK is looking into possible criminal prosecutions.

 

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  • rate this
    +7

    Comment number 851.

    he should still be charged and face full justice system. resigning is not enough.
    the serious crime squad should look into this affair. it is a serious crime.

  • rate this
    0

    Comment number 850.

    Hold on just a second....

    I don't remember seeing the leaders of either the Tory Party or Labour Party stepping down when individuals in the party they controlled stole taxpayer money through false expenses...

    Yet they call for resignation here, no doubt to win votes in a country where hating the largest tax generating industry has become a national sport...

  • rate this
    -4

    Comment number 849.

    In business you make money by fair means or foul.
    Banking is no exception.

  • rate this
    +2

    Comment number 848.

    whether they knew what was going on or not is irrelevent, if they did know they should have done something to stop it, if they did not know then they should have known, it is simple. as regards the traders, every single one should be tracked down and personally fined very large amounts, this is the only way forward, make them personally responsible for actions they knew full well were wrong.

  • rate this
    -10

    Comment number 847.

    I would guess that in most cases this furore has not affected any of the posters on HYS Yet the RENT_A MOB bay for blood.
    Under Mr Diamond Barclays has become world leader in investment banking.. Under the direction of Labour and the Envious Socialists the U.K.
    Has become a Benefits Utopia Bankrupt state of massive taxation and hard work and success haters..
    That the true disgrace

  • rate this
    +75

    Comment number 846.

    I left Barclays after many years service because of a culture of 'win at all costs'. I am not surprised that was has transpired & the part of senior management in setting the tone of an organisation cannot be over-estimated.

  • rate this
    +9

    Comment number 845.

    The banks / bankers need to be well and truly put in their place. I agree that Barclay's have been very successful under Bob Diamond but it should count for nothing if this success was achieved through deception and dishonesty. We should throw the book at them If it takes the collapse of Barclay's to send a warning shot to other unscrupulous institutions then so be it.

  • rate this
    +5

    Comment number 844.

    It appears that Mr.Diamond feels that he is taking the moral high ground by resigning his position. Is this possible when his bank and the whole banking system in which he operates appears to be morally bereft?

    As per usual ridiculous salaries and bonuses will inevitably be followed by golden handshakes rewarding mismanagement.

  • rate this
    +77

    Comment number 843.

    As a Barclays pensioner we 'old style' bankers could see the problems looming. It started with payment for performance which became increasingly 'payment for profit at any cost'. Diamond was one of its keenest supporters and sent a cultural signal throught the organisation. Barclays must now find a new CEO and Chaiman and invoke the Vicker reports reccomendation as fast as it can - not in 2019

  • rate this
    +7

    Comment number 842.

    Perhaps Bob is resigning to spend more time with his bonuses

  • rate this
    +2

    Comment number 841.

    Government must legislate retrospective laws to prosecute these fraudsters and strip the bank of its assets to compensate all of us.

    A message must be sent to the untouchables that you will be punished if you cheat and steal!

    Else clearly there is no justice in this country, which sets a low morale standard for the rest of society.

  • rate this
    +5

    Comment number 840.

    Bob Diamond is one figure in a Bank full of people who masterminded and carried out the fraud. Are any of these people also resigning? If they do, they will retain the money they made from their actions. Ministers want a scape-goat to appease the masses and safeguard their future positions on Barclays and other banks board of directors when they retire.

  • rate this
    +2

    Comment number 839.

    #667 Blue sky thinking

    You see, in the UK, opposition politics means one thing and one thing only, you oppose everything the other party plans to do even if you agree with it.
    Don't be fooled.
    ----------
    So, when Dave Cameron said he'd match Labour spending and ring fence the NHS and front line emergency services he was just pretending to endorse Labour policy...aaaaah I see.

    That was clever.

  • rate this
    +7

    Comment number 838.

    Let me guess, the powers that be will say we need more leglislation, No we don't. This is Fraud, theft, dishonsety and breach of any robust company code of conduct. Press charges now,prosecute where guilt is proven. I wonder what the next banking scandal will be that has ripped Britain PLC off for personal gain. Worryingly as the old saying goes a Leopard does not change its spots

  • rate this
    +5

    Comment number 837.

    So he's so 'talented' that his resignation might damage Barclays ability to make profits? So what? Why should we care? It might damage our economy? Not to the devastating extent that the actions of reckless bankers have already achieved, surely?

  • rate this
    +2

    Comment number 836.

    To be honest bankers and politicians are both alike and its no wonder the country is in the mess it is, its going to take someone with balls to get us out of this mess and there is no one with them to do it.

  • rate this
    +4

    Comment number 835.

    "the Barclays boss was encouraged to go by the Bank of England and the FSA"

    Like closing the barn door after the horse has bolted.
    Wasn't it their job to regulate banking practises?
    And what of internal compliance depts?

    And The Treasury sits on top of the whole steaming pile.
    What was Gordon Brown doing? (Apart from handing out Knighthoods to RBS bankers?)

  • rate this
    0

    Comment number 834.

    645.Rosetta
    No, I don't have a pension. I put my money into hard work, precious metals and land. So far I'm up 400%.

    So in other words you invest/speculate in commodities and land, bragging about how your portfolio (retirement fund ?) is up 400% and you call those who do the same with shares "vultures"
    I can't stop laughing...

  • rate this
    +2

    Comment number 833.

    This all happened under Labour's watch. Just another example of how totally incapable they were of running the economy and a prime example of the society they created. After 13 years of them in charge we are left almost bankrupt and held to ransom by a morally moribund financial sector. Thanks Tony, thanks Gordon.

  • rate this
    +4

    Comment number 832.

    It is the bonus (something for nothing) culture that has contributed to the insatiable greed in many sectors of society not just banking. Politicians, lawyers, the media as well as bankers have all had their noses in the trough. Yet who is being asked to investigate bankers? It is high time that bonuses were banned and we returned to an honest day's work for an honest day's pay!

 

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