Bank of England 'eased Diamond out'

  • 3 July 2012
  • From the section Business
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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.