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
    +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
    +37

    Comment number 33.

    how can anyone believe politicians are able to properly investigate what has happened in the banking world? Politicians are widely distrusted and as such the public have no confidence in them. Yet the Chancellor stands up and says there will be a parliamentary enquiry - the miracle is he kept a straight face.

    It appears there are so many strands of society which are rotten to the core.

  • rate this
    +26

    Comment number 30.

    Diamond should have been suspended immediately by the Board and then fired with no golden parachute, no rewards and all bonuses clawed back

    Where are the people with morals and high standards - obviously not in banking which now has another name - greed

  • rate this
    +24

    Comment number 32.

    I hope someone's confiscated his passport.

    The 'talent' kept threatening to leave the country, but I imagine fleeing the law wasn't what they meant.

    I would say OK to that, but perhaps Bob and several others should be staying for a while at her majesties pleasure instead.

  • rate this
    +21

    Comment number 7.

    Great so who needs to move their eyebrows to get rid of King and Turner, because as far as I can see although not directly implicated they were both in charge when all sorts of misdemeanors were going on.

 

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