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 Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    +4

    Comment number 27.

    MK did not even reply to my complaint about how children's savings accounts have been treated in the past 6 years! As I reminded him it was ADULTS that caused the financial crisis, NOT CHILDREN! We clearly have an ADULT who knew what was going on! He should suffer same fate as MADOFF.....

  • rate this
    +2

    Comment number 26.

    14.aldogrism
    Just now
    The one positive thing to come out of the entire banking crisis, going back

    I fear you're over optimistic

    Most people read a blog and think they know it all, when you actually need to study to understand the issues, and think to imagine the true value or cost of an act, Barclay's weren't the only ones and Banks weren't all of those involved

  • rate this
    +14

    Comment number 25.

    If a young boy steals a bread because of hunger he will be put to jail, but,
    if CEOs of big banks commit such frauds, nothing happens to them. They just resign and escape. Bob Diamond should be criminally prosecuted! In fact all the bankers should be prosecuted due to criminal negligence in handling investors money.

  • rate this
    +4

    Comment number 24.

    `.....the governor getting his way by the inflexion of his eyebrows...'

    It used to be done over a glass of brown sherry. Is this another example of public sector cuts by the evil Tories?

    This sets a useful precedent for the next bank in the line at the door of the FSA..

    The public are in a hanging mood. The government and the opposition should take careful note and pull no punches...

  • rate this
    +1

    Comment number 23.

    So the argument that if he new he sold go.
    If he did not know he is incompetent and should go, seems to have the day.

    Perhaps he will a job as Governor of the BOE, after all Bob is better at fixing rates then Mervin

  • rate this
    +52

    Comment number 22.

    Osborne has appointed someone who seems to hate banking regulation to chair the inquiry into banking!

    Andrew Tyrie, co-authored a paper titled ‘Leviathan at Large‘.
    The bulk of the paper is focused on criticising financial regulation, with chapters titled: ‘The risk of over-regulation‘, and ‘The danger of oppressive and arbitrary regulation‘.

    Is there no end to this sleaze?

  • rate this
    +14

    Comment number 21.

    Diamond resigned to avoid the select committee and protect those at the top, Bank of England Deputy Boss Paul Tucker’s ‘word’ and those even higher who would have been implicated in the investigation. That's how the elite close ranks.

  • rate this
    +2

    Comment number 20.

    MERVYN KING MUST be SACKED.

    He almost single handed corrupted the whole system by not knowing what he was doing (best interpretation!).

    He destroyed the price of money to the lowest level in the over 300 year history of the bank - one fifth of the previous low level.

    This is the ROOT of everything & why we can't get a recovery started.

    He hasn't even saved the banks - just put off doing it!

  • rate this
    +11

    Comment number 19.

    It will be a complete travesty of justice if there are no exits at FSA, Barclays internal audit and compliance and Barclays external auditors. This is an appaling example of supervisory breakdown.

  • rate this
    +5

    Comment number 18.

    King wanted Bob the Banker to go in an attempt to forestall a full judicial inquiry into the UK Banks.

    Any such inquiry

  • rate this
    +2

    Comment number 17.

    I'm not sure the world is a better place when the country's top regulator only needs to waggle his eyebrows to change the board of a private company. But that is only because I don't think we should have a regulatory elite that is unaccountable to parliament. Mind you, parliament is totally useless because it is under the control of two Old Etonians. This is it for the establishment, this time.

  • rate this
    -15

    Comment number 16.

    I have worked for Barclays for 5 years and during the financial meltdown period Bob Diamond was inspirational. He will be a great loss to our most successful industry and will inevitably end up inspiring another US business in a similar fashion. This was not his fault.

  • rate this
    +2

    Comment number 15.

    If only all leaders followed the same code and led by example. Bankers, politicians and others who seek power over us please take note....and remember to close the door behind you.

  • rate this
    +2

    Comment number 14.

    The one positive thing to come out of the entire banking crisis, going back to Northern Rock in 2007, is that most UK citizens have, however unwillingly, been forced to acquire a MUCH better knowledge and understanding of banking, finance and macro-economics than we ever had before. Has the whole thing been engineered in order to educate us? Hopefully, we'll be harder to fool next time... Or not.

  • rate this
    +3

    Comment number 13.

    Who then will be making the call for MK ? QE and related policy successes ? We rely on BOE to set policy & regulate banks, the police to apply law, MP's to make law, the legal system to prosecute and the media to keep all honest. Every institution has failed. Who then is actually qualified to clean up the stables ? Public faith in our institutions has gone way past the tipping point.

  • rate this
    0

    Comment number 12.

    I'm not unreservedly sure that government by eyebrow-twitch is a good thing - it has the air of the back room deal about it. A clear and public statement would perhaps have been better, if humiliating for the target.
    Actual firm regulation and investigating who knew what when and prosecuting based on the findings is still a good next step, eyebrows or not.

  • Comment number 11.

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

  • rate this
    +3

    Comment number 10.

    Old Boy network at its BEST! Some would argue myth & folklore of MASONIC brotherhood, allegedly played its part! For sure no criminal acts.......Most folk would disagree if you look at recent bloggs, so we have a book / film in the making then...is Harrison Ford available?

  • rate this
    +8

    Comment number 9.

    Oh poor Bob thinks he is being 'hounded'!
    Then the parliamentary committee must not upset this high flyer by asking any pertinent questions in any great depth.....no we should leave this assault on his delicate sensibilities to a judge!... but we are not going go that far as the government clearly is of the opinion that it would be a step too far...I wonder why?

  • rate this
    +3

    Comment number 8.

    PPI, Swaps, LIBOR manipulation are just the tip of the iceberg. FSA is either toothless, deaf & blind or full of people who do not know anything at all about regulating the Financial Services.
    What is happening in Insurence Sector? Just because the premium demanded by the insurence companies to insure does not affect oveall economy of the company, they are ripping us customers for every penny.

 

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