Barclays to review 'flawed' practices as Agius resigns

 

The BBC's Robert Peston reports on the ''momentum'' that was building for Mr Agius to go

Barclays has promised a "root and branch review" of its business practices and announced the resignation of its chairman Marcus Agius.

This follows Barclays' attempts to manipulate inter-bank lending rates, for which it was fined £290m ($450m).

In a statement, Mr Agius said: "The buck stops with me."

The government is expected to announce a wider inquiry into banking later, in addition to the inquiry of the abuses of Libor rates already announced.

Chancellor George Osborne is expected to announce more details of the wider inquiry when he makes a statement to the House of Commons at about 1630BST.

The new inquiry will not, however, be a full public inquiry like the Leveson Inquiry into press standards, which Labour has asked for.

Leader of the opposition, Ed Miliband, said criminal charges should be brought against those involved in the rate-fixing scandal and called for the resignation of Barclays chief executive Bob Diamond.

He said it was really important to restore trust in British banks. "I really don't think that can be done by Bob Diamond," he said.

Former Barclays director Baroness Wheatcroft told BBC News that the chairman was currently "carrying the can" and said Mr Diamond's resignation was now "inevitable".

Blow to reputation

Start Quote

Interestingly Sir Mike Rake - the chairman of BT - has been appointed deputy chairman of Barclays, which many will see as the strongest possible signal that the board wants him to succeed Mr Agius as chairman”

End Quote

Mr Diamond will appear before MPs on the Treasury Committee on Wednesday, followed by Mr Agius on Thursday.

Mr Agius has also stepped down as chairman of the British Bankers' Association, which is responsible for compiling Libor.

Mr Agius, who also serves on the BBC's executive board, said last week's events were evidence of "unacceptable standards of behaviour within the bank".

He said the findings had "dealt a devastating blow" to Barclays' reputation.

Barclays' board has launched an audit of its business practices, which will be conducted by an independent body and report to the new deputy chairman, Sir Michael Rake.

The bank promised:

  • a "root and branch review" of its "flawed" past practices
  • a public report of the audit's findings
  • a new mandatory code of conduct for all staff

Barclays will establish a "zero tolerance policy" to anything that damages its reputation, the bank said in the statement.

Sir Michael Rake, BT chairman and senior independent director at Barclays, has been appointed deputy chairman at the bank. He is seen as a likely successor to Mr Agius.

Mr Agius will stay on as chairman while Sir John Sunderland, a non-executive director of Barclays, looks for his replacement.

Different culture

Shareholder reaction

Peter Kent from Ashford has been a Barclays' shareholder for two years.

"I have seen my investments diminish week by week.

"Dividends and profits have continued to decline, which has been extremely frustrating.

"There has been a lot of bad press about Barclays, with fines for mis-selling, wrongdoing and bad practice. Their credibility and profitability has reduced because of this. This inter-bank lending scandal is just the latest fiasco.

"Bob Diamond has an exorbitant salary, which is unjustified. He has failed to deliver in his position of CEO.

"Marcus Agius should have ensured that the execs were doing their job properly and should have replaced Bob Diamond.

"Barclays needs a new CEO. This would bring credibility to the bank and give the opportunity to concentrate on good practice, profitability and a return for shareholders."

Barclays was fined after the Financial Services Authority (FSA) found its traders had lied about the interest rate other banks were charging it for loans. Investigations are also under way at RBS, HSBC, Citigroup and UBS.

Giving a lower reading than the true rate would give the impression that Barclays was considered a better lending risk than it actually was.

Reporting a higher reading than the real rate could have inflated trading profits artificially, misleading investors and regulators.

The FSA found evidence that Barclays, sometimes working with staff at other banks, had tried to manipulate Libor (the London Inter Bank Offered Rate) and its European equivalent Euribor between 2005 and 2009.

Bob Diamond said Mr Agius' decision "deserves all of our respect" and paid tribute to Mr Agius' six years as chairman: "He has been a thoughtful and supportive colleague to me in all of my roles - especially since I became chief executive last year."

But the BBC's business editor said some shareholders thought Mr Agius had failed to stand up to Mr Diamond, who was regarded as very talented but also very headstrong.

Earlier this year, Mr Agius was criticised for backing a £17.7m pay deal for Mr Diamond. A number of shareholders voted against the remuneration package.

Mr Diamond welcomed plans for an independent audit: "I am committed to ensuring that the recommendations from this review are implemented in full."

He also promised to "continue to build a culture that all of those with a stake in Barclays can be proud of".

 

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  • rate this
    +2

    Comment number 223.

    As a shareholder in, and customer of, Barclays Bank plc I am appalled at recent developents. How many more instances of blatantly fraudulent behaviour are going to come out of the woodwork, and from which of our "reputable" High Street banks, before sanity returns to our economy? Notice to Mr Diamond and his cronies - my accounts will be moved to somewhere more ethical a.s.a.p.

  • rate this
    +2

    Comment number 222.

    How about this for a potential conflict of interest? The chairman of Barclays, Marcus Agius, is also the senior non-executive director on the BBC's executive board.

    Agius joined the Barclays board in September 2006 and took up his BBC role the following December. A month later, he became Barclays chairman.

  • rate this
    +4

    Comment number 221.

    They can't be trusted to host their own review! Barclays customers should all make a stand and just close their accounts.

  • rate this
    +3

    Comment number 220.

    Amazing how they promise root and branch reform when they get caught. I thought the job of the executives of a company were to maintain the company profits and probity for mutual benefit of the customers and shareholders. It seems that a number of executives have seen their companies as personal fiefdoms to enrich themselves.

  • rate this
    +3

    Comment number 219.

    176. Spacehighwayman

    "Accused"???.... no not accused... they have been found guilty, hence a £290 MILLION fine.

    And as someone has quite rightly pointed out, what they did was the equivalent of "Insider Dealing" and therefore criminal offence.

  • rate this
    +1

    Comment number 218.

    Surely consumers will now be able to challenge these LIBOR rigging banks over "maybe" dodgy fixed rate mortgage deals. We signed up to a 15 year fixed rate, so if there was a PPI equivalent rebate I am sure if the funds were repayed to mortgage payers, this would in itself fuel an economic recovery as people would spend again.

  • rate this
    +8

    Comment number 217.

    Typically the chairman has got it wrong - the buck doesn't stop with him but the person in charge - the CEO Bob "teflon" Diamond.

    If he is the best the bank can do then the old boys network must be totally failing.

    Which bit of CHIEF OFFICER does he not understand?

  • rate this
    +4

    Comment number 216.

    Who the hell is this guy??? Because it's not one of the many I've heard/seen before, like the ones with actual power who screwed all this up!

    We are just been thrown a scape goat here to make us think, right someone has been punished, done, dusted.

    Unfortunatly most people WILL be content when they see this on thier news and banks will go back to normal, people really need to make a stand.

  • rate this
    +6

    Comment number 215.

    #176

    Err…could you please explain to us economics "dummies" on here how the blatant misprepesentation of key financial data by a major bank is either benign or beneficient to society?

    If I were to lie on a mortgage application, my CV or to an accountant then I'm sure I would forfeit more than my upcoming bonus.

    Why should bankers live by different rules?

  • rate this
    0

    Comment number 214.

    sorry that should have been @176

  • rate this
    +3

    Comment number 213.

    It should be clear looking at the process by which banks set Libor and the motives for false fixings that Barclays aren't the only ones doing this.

    Libor fixings are the 1st in a long list of scandals yet to be found. The problem is once senior traders make decisions only Middle office can object. Though, lack of market and regulation knowledge in middle/back office functions makes them useless

  • rate this
    +6

    Comment number 212.

    Fines mean nothing to these institutions, unless people start going to jail for 8 to 11 year stretches no one is going to think twice about investing other people's money in fraudulent or deceitful ways. If jail time is involved perhaps that'd make people think twice. And yes I know bankers most are lovely, but I don't seem them doing anything to reform their own industry.

  • rate this
    +3

    Comment number 211.

    The UK is going to the dogs.

  • rate this
    +5

    Comment number 210.

    I have decided to start an new bank called Monetary and Financial Investment Association or MAFIA for short. The name might be a disadvantage but at least it will be an honest reflection of my ethos as a banker.

  • rate this
    +5

    Comment number 209.

    The root of the problem is personal greed which is encouraged by the bonus system. Do away with bonuses and pay a fair salary for the job and the incentives to fiddle the books should go. If they threaten to take their "expertise" elsewhere then let them - after all, their expertise got us into this mess.

  • Comment number 208.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +6

    Comment number 207.

    These people need not just to be sacked but to be banned from working in the UK in any executive capacity.

    These people are as unwelcome here as any drug dealer.

    And anyone who defends their value to the economy, just remember that they have cost more to the taxpayer than any taxes they have raised in at least the last ten years. And they haven't stopped costing us.

  • rate this
    +6

    Comment number 206.

    Lets just think about this. Barclays willingly manipulated fundins interest rates which helped collapse the banking system and we are to sit here while thye 'look into it'. Jeeze H, if you or I have done a similar thing we would be looking at hard time, not a fine so small that it will not be noticed, and if it is, paid by customers. time for action David and cronies.

  • rate this
    +4

    Comment number 205.

    If board members of a business knowingly ignore illegal,dishonest or unethical practices of their employees,whether they are complicit in those actions or not,they should be liable for a percentage of any fines levied by regulators and barred from executive or advisory board positions for a period commensurate with the wrongdoing.They might then take more interest in doing their jobs properley.

  • rate this
    +8

    Comment number 204.

    While a fine of £290m might seem like an eye-watering amount, it’s worth noting that this sum is equivalent to a mere 10% of the amount that Barclays paid out in bonuses last year. In that context, it probably doesn’t represent much more to Barclays than a fairly feeble slap on the corporate wrist.

 

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