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 263.

    "No law has been broken": ! ?
    How about Sections 2, 4, 10, 12 and possibly sections 3, & even 6, 7 of the Fraud Act 2006 ?
    For which penalties range up to a possible 10 years in prison.
    Let's wait to see if any prosecutions follow.
    However it may be best to deport all that can be to face trial in the US where fines can be much higher and prison maybe longer - but definitely less pleasant.

  • rate this
    +2

    Comment number 262.

    Class action suits are more effective than vitriol: There are a number on way for Barclays, Lloyds, RBS etc. in the US.

    Federal prosecutors will also likely move into action soon: The historical precedent was set with BCCI.

    The Cartel action of the banks does extend to HM Govt - the Gilt manipulation behind LIBOR is a much bigger issue.

    Hedge Funds also involved - Google Brevan Howard / RBS

  • rate this
    +6

    Comment number 261.

    Bob Diamond gave a speech recently saying the banking industry has apologised enough. Lets review:

    the only party to emerge unscathed following their part in the 2008 crash

    miss - selling PPI scandal

    miss -selling loans to small businesses scandal

    distoring LIBOR scandal

    avoiding HUGE amounts of tax

    finished apologising eh? itll take more than an "internal enquiry" for me!

  • rate this
    +6

    Comment number 260.

    Every body in power seems to be afraid of the bankers with their threats to go abroad if the "staus quo" is not preserved - Sod them, let them go abroad and screw over some other Country.

    Then MAKE SURE THAT ALL BANKING IS TRANSPARENT. Other companies have to have checks and balances and are independently auditted. Tony Robinson was right in last week's question time.

  • rate this
    -2

    Comment number 259.

    Are you sure that Ed Miliband wants Diamond to resign? Although his words tend to speak for themselves, his spokesperson on Sunday Politics seemed to disagree with this. Are you sure he wants a Leverson-style enquiry? His spokeswoman seemed to disagree with this too. In fact, I think Ed makes it up as he goes along. It's easier that way, when there's no one competent enough to catch him out.

  • rate this
    +2

    Comment number 258.

    My 92 year old mother rang me yesterday and said she was worried she could no longer be sure she wasn't being swindled by her bank too, as she couldn't see to read her statements anymore. How sad have things got now?

  • rate this
    +6

    Comment number 257.

    Some people say that it's right top executives are paid such big wages because they take on most of the risk:

    They get paid millions whether the company performs well or not and if they do get sacked they walk away with another million. Even if they couldn't get a job working in a well known fast food chain it wouldn't matter as they are financially set for life.

    Where is the risk??

  • rate this
    -3

    Comment number 256.

    #219 Andy

    If you had read my very first post I had already referred to no law being broken and invited those who had never broken a law to cast the first stone. A breach of FSA regulations is not against the law, and my comment remains that too many on this site are carried away by a hysteria driiven by lack of financial knowledge, envy or both!

  • rate this
    +3

    Comment number 255.

    Barclays may as well review themselves, they will be just as effective as anyone else at looking through all the bags of shredded paper and declaring there was nothing to find!!!

  • rate this
    +5

    Comment number 254.

    4.CityBoyCityBoy

    Great Financial Industry Pays so much Tax

    Where do you think the money comes from too pay so much Tax

    You guess right Fleecing the rest of us !!

    Until Bankers respect the fact they are Not Gods Gift to us all but cog economic machine economy will never recover.

    We all play a part Entrepreneurs, Accountants, Doctors, teachers etc

    Banks show respect rest society

  • rate this
    +3

    Comment number 253.

    Just wait until you see next year's report and accounts, when you will probably discover just how much "compensation" Mr. Agius has creamed off...............golden parachute payment, enhanced pension rights, free beer or whatever.

  • rate this
    +6

    Comment number 252.

    150. Spacehighwayman
    It seems to me that the the City fails to understand the true dis-parity between the rewards of the incompetent bankers who produce nothing that has an intrinsic value, who are rewarded so lavishly and the hardworking who produce a real service yet only receive enough to survive. Blaming peoples feelings on envy alone shows a lack of understanding and will only fuel the flame

  • rate this
    +4

    Comment number 251.

    What does he mean 'the buck stops with me'? Has he got CPS and the Police in his pocket as well. Surely its up to the CPS/FSA...eventually to decide where the buck stops.
    Bankers......they just can't help being arrogant.

  • rate this
    +7

    Comment number 250.

    We can't let these people off, they need to get prosecuted and jailed for their crimes. We are sick and tired of paying for greedy peoples mistakes They should face the law same as any other citizen that commit a crime. No one should be above our law and get away just because of their status.

  • rate this
    -2

    Comment number 249.

    The BBC's executive board is responsible for the corporation's operational management and for the delivery of BBC services according to plans agreed with the BBC Trust. Agius is the most senior of six non-executive members.

    The BBC has insider knowledge? The BBC should be broken up as should the high street banks.

  • rate this
    +4

    Comment number 248.

    Traders should work just like everyone else on a salary. They gamble with other peoples' money sharing in percentages of the profits but not the losses, yet at the same time charging for the opportunity. Traders should work for a fixed salary like most people. Investment funds would then yield better results as they would cease to be raided at source, giving the investors the returns they deserve.

  • rate this
    +4

    Comment number 247.

    Whatever we're teaching our children, they will look at the role models of the world and stamp our moralising advice as drivel and conclude, rightfully so, that Crime does pay high dividends. Who can blame them?

    We're fighting a losing battle as we're too inert to take bankers et al to task. They need re-educating, understand what's right/wrong and realise that greed is a deplorable trait.

  • rate this
    +5

    Comment number 246.

    Picture the meeting: What shall we do? We better investigate this before someone else does or we're screwed!

  • rate this
    +18

    Comment number 245.

    All these organisations care about is money. So the only way to get back at them is with your money. If you don't like the banks, use mutual Building Societies - they not out to make huge profits and actually care about their members.

  • Comment number 244.

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

 

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