Bank of England 'eased Diamond out'

 
Bob Diamond Mr Diamond was not found personally culpable by the FSA for Barclays' attempts to rig Libor

I have learned that Bob Diamond's departure was encouraged by the Governor of the Bank of England, Sir Mervyn King, and the chairman of the Financial Services Authority (FSA), Lord Turner.

The version of his exit, given to me by a senior Barclays source, that Mr Diamond went because of the heat from parliament, is only half the story.

What persuaded Mr Diamond and his board colleagues that he should resign was an unambiguous message to the bank from Sir Mervyn and Lord Turner that they would be happy if he resigned.

They were unable to force him out, because the recent FSA investigation into how Barclays attempted to rig the important Libor interest rates did not find him personally culpable.

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.

"This is a case of the governor getting his way by the inflexion of his eyebrows," said a source.

"It is how it used to happen and it is a good thing that it is happening again".

Update 12:10 BST

The message that the Bank of England governor wanted Bob Diamond to go was delivered personally to Barclays' chairman Marcus Agius in a telephone conversation between the two of them yesterday.

Update 13.05 BST

My disclosure that the governor of the Bank of England and chairman of FSA wanted Mr Diamond to resign, and effectively bundled him out the door, is profoundly embarrassing for Barclays' non-executive directors.

The question for them is why none of them bothered to check what the attitude would be of the City's two most powerful regulatory figures before they accepted the resignation of Marcus Agius as chairman.

To state the obvious, the impression has been created that this hugely important institution is not in charge of the basics of its destiny.

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

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  • rate this
    0

    Comment number 507.

    If you set up a game where a few of the players can make up the rules as they go along, they will change them to make sure they win. What did anyone expect ?

    G.

  • rate this
    +2

    Comment number 506.

    Barclays was manipulating Libor in 2006, the financial crisis began to rumble in 2007 but didn't explode until 2008. What Barclays started doing in 2006 it was doing for its own gain, not for politicians nor the BoE. The blame game is fun and some people might feel in need of a smoke screen, but let's not all fall for this. However it should have been spotted or what are regulators for?

  • Comment number 505.

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

  • rate this
    +2

    Comment number 504.

    499.presario

    "OK, the treasury collects massive income from the banks..."

    Nah. Just over £100m corp tax from Barclays, who made £3b profit. Compare that with subsidies, guarantees, bailouts and QE, and I wonder if we get anything at all from them

    Or perhaps you mean income tax? The government is attempting to reduce higher rates.

    Proportionally, SMEs contribute significantly more.

  • rate this
    +1

    Comment number 503.

    #446 Toby Chambers

    I for one am happy for Bob Diamond to blame others.

    We need an arrogant loose cannon with inside knowledge at the highest level to spread as much muck as possible.

    Because we need the truth to be exposed and the guilty to be prosecuted. And the more he loses it, the more the rest of us gain from a clear picture emerging.

 

Comments 5 of 507

 

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