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.

  • rate this
    0

    Comment number 502.

    Aside from miss-selling (PPI) and outright fraud we have seen in the last week, an enquiry should not be shallow and determined by politicians, it should involve representatives of the vast majority of hard working bank staff who have helped build the business during very difficult times. We need a banking and financial system that supports growth and gives the tax payer value for money

  • rate this
    +1

    Comment number 501.

    If it is found (as it strongly suspected) that the Bank of England is involved then Mervyn King has to go as well. Lord Turner should also be clearing his desk, this was allowed to happen under his watch.

    Bob Diamond can't be blamed for everything, if the BoE approved of this practice then "Sir" Mervyn needs to be given his marching orders pronto.

  • rate this
    +2

    Comment number 500.

    Questions remain to the FSA and by implication with the Bank of England. This needs an Independent Royal Commission as we cannot trust MPs as previous expenses scandal shows.

    What comes out of recent events is a sickness of hypocrisy, greed and incompetence alive at the top of all UK Financial institutions. Consumers cannot such institutions as few are fit for purpose.

  • rate this
    +1

    Comment number 499.

    OK, the treasury collects massive income from the banks but where does the money being invested etc. come from? It appears to be a mystery to most people. Our economy does not appear to benefit because the banks are not investing in our businesses. Are the banks equivalent to, say, a drugs economy make huge profits? Should we be asking no questions?

  • rate this
    -1

    Comment number 498.

    How is The King's Eyebrow this morning?

    Should we not get a daily report?

  • rate this
    +1

    Comment number 497.

    This banking scandal reminds me of Eng-NZ match where Eng captain appealed for run out when it was morally wrong but legally right. Umpire had no right to rule the appeal as wrong. Result, captain was removed. Rules remain the same. No control over individual's actions. Game continues. But, no guarantee that incident will not be repeated in future.

  • rate this
    -1

    Comment number 496.

    461.JCisJD

    "...In essence what the BBC are doing is colluding with the status quo..."

    ===

    I suppose that's their job, really...implicit in "impartiality" are accepted or asserted norms, and those have to come from somewhere...

  • rate this
    0

    Comment number 495.

    @491.under 16 over 16

    Osborne is still on a big learning curve about economical growth and hasn't achieved any targets
    ---

    I thought that he was being economical with growth!:)

  • rate this
    0

    Comment number 494.

    it is interesting that the leaders in parliament remain , surviving the expenses scandal.... however they are as keen as ever to unleash the lynch mob on corporates. The hypocrisy is sickening. Lets wait and see what the full facts are and how many other banks & regulators become implicated before issuing moral judgements from on high.

  • rate this
    -2

    Comment number 493.

    What this ridiculous government is playing at in systematically trashing one of the few British export successes, financial services, is beyond my comprehension The reputation of the City is being publicly destroyed and to what end? To make it worse it is becoming pretty clear that the Bank and the financial regulators knew what was going on all along.

  • rate this
    0

    Comment number 492.

    Comrade@385
    "All education valuable"

    Forgive them, they know not what they do

    Visit any clinic: see waits, see over-runs, be alive to frayed-edges of 'professional ease'

    Then think: 'cases' doctors would LIKE to share, consultants too busy to be troubled, juniors missing-out on culture-transfer

    Yes, we lack staffing even for the essence

    But late for FIRE LECTURE etc, to face 'discipline'?

  • Comment number 491.

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

  • rate this
    +1

    Comment number 490.

    Where are the arrests? Where is the SFO? Same old political whitewash...

  • rate this
    0

    Comment number 489.

    Ed Martin @478
    Yes, odd
    Blind to beam, prejudice on mote

    Important 'difficulty', understanding another's expert field

    Worrying to read 'reports' on events or issues known to us

    And to see trial collapses in 'Serious Fraud'; loyal evasions in 'Leveson'

    Collective NEED is for universal RATIONAL trust, possible only when freed from Conflict of Interest, happily settled on Income-Share Equality

  • rate this
    0

    Comment number 488.

    @470
    LIBOR nothing to do with savers. At least directly. Effect that LIBOR manipulation had on customers - may (MAY) have been tiny, nothing or even beneficial.

    What it does seem to have done is maybe prevent t/payers having to bail out Barclays. It may have kept banking system from going down before any bail out could be offered to other banks.

    Doesn't make it right.

 

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