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
    +5

    Comment number 283.

    And what are our politicians doing about it? Nothing (as usual)

    It is 4 years since the banking crisis began and they have still not done a thing to regulate the banks. They say it will be 2015 or beyond before we see any real action. Their hope is by then we will all have forgotten about it, so the plans will be quietly watered down or shelved.

    This is not good enough.

  • rate this
    +2

    Comment number 282.

    So Mr Agius goes up the road with his pockets lined and Diamond gets of scot free, get used to it Cameron a Tory without a mandate is your PM.

  • rate this
    +3

    Comment number 281.

    Seriously, an internal investigation and only a token sacrifice? They manipulated the global money markets, knowing full well what they were doing was wrong and other than a small fine, they now escape criminal investigation? How does that work? I presume the 'internal review' won't just be finding out how not to get caught next time.................

  • rate this
    +3

    Comment number 280.

    it should be a police enquiry

  • rate this
    +4

    Comment number 279.

    As a Barclays customer, I am very tempted to take my account elsewhere. Two things stop me:

    Firstly, I get as good service from the staff in my branch as BArclays' policy allows, and They don't get the big bonuses. I don't want to give the management more excuse to close another branch.
    Secondly, I have no doubt that Barclays are just the ones who have commited the crime of being caught.

  • rate this
    +3

    Comment number 278.

    Wonder how many people will go to jail for this? I'm thinking not many.

  • rate this
    +5

    Comment number 277.

    FBI = serious investigation
    US law = lawsuits a plenty
    UK = ZERO BEING DONE!
    Why is that David? Have you & your crooked mates really got THAT MUCH to hide!?

  • rate this
    +2

    Comment number 276.

    So if I plant a computer virus in the banking system and make money from changing intrest rates I won’t be prosecuted?

  • rate this
    +3

    Comment number 275.

    The horse bolted well over 15 years ago on a free for all in banking. Nothing will happen to all the people who have made money out of irregular selling of Bank products from the Board through to so called Customer Advisors. There has been a culture of get rich quick, sell to maximise bonus, high turn over of staff and no loyalty. Do you think bonuses will get clawed back for irregular selling?

  • rate this
    +3

    Comment number 274.

    If its bad here…..i hate to think what an expose of Swiss banking would undercover

  • rate this
    +5

    Comment number 273.

    Comment 36 - absolutely spot on. As Vince Cable commented, we'll throw someone in jail for petty theft, but these cowboys commit crimes on a mind boggling scale and nothing is done. The FSA bleat that there is nothing they can do about the situation. This was wilful fraud - these banks - not individual bankers - perpetrated a market fraud for financial gain.

  • rate this
    0

    Comment number 272.

    "Miliband..criminal charges..rate-fixing scandal"

    OK Ed.
    But apparently stds really started to slip on this from the period 2005-08. And the Libor rate setting op is so big that it's impossible that regulators & politicians could not have known about it -or were incompetent if they didn't. I'll look fwd to some of yr shadow cabinet colleagues squirming in the witness box, Ed.

  • rate this
    +2

    Comment number 271.

    http://www.bbc.co.uk/news/technology-18672068

    "Pavel Cyganok was jailed for five years and Ilja Zakrevski for four years for masterminding the hi-tech crimes."

    In comparison to what has been happening in the banks, these crimes were relatively trivial so I would expect some of the bankers involved in recent events to get 100s of years!

  • rate this
    +5

    Comment number 270.

    "The buck stops with me." Does this mean I am doing this, no doubt with a massive pay off, to protect the likes of Bob Diamond?

  • rate this
    +2

    Comment number 269.

    Sick & tired of enquires, debates and discussions. The politicians ain't going to do much. Not sure how the laws going to be enforced on these people. So we need to do something our self. As #245 said we need to move away from the banks and use trusted organisations like mutual Building Societies.

  • rate this
    -1

    Comment number 268.

    The Editor's Pick [245] is good. Perhaps we should have the same choice over the Licence Fee?

    BBC, Banks, Boards, Educ., Govt., the same people on the same roundabout.

  • rate this
    +4

    Comment number 267.

    I can understand how bankers are often just blamed for everything these days and I try not to jump to conclusions, but these people need to me taught a lesson. They are constantly let off, find, or just ignored while they pick apart this country with ethics of greed and selfishness. They are a cancer, and we as a society need to realise this and act, even if our government are too pathetic to.

  • rate this
    +2

    Comment number 266.

    What we need is tranparency. Those who have carried out wrong doing need to be punished, in particular if a crime has been committed. There should be no shirking of responsibility in this.
    I am sure there are good honest people in the finance sector who can and will rebuild public confidence. However there requires to be more scrutiny on the sectors behaviour

  • rate this
    +1

    Comment number 265.

    so they are reviewing themselves lets leave it there then, any announcement they make is based upon saving their share value not in the interests of justice or moral obligation. they believe they have done nothing illegal so will just be reviewing how their system got out into the open. we however suspect there is something illegal why would they be resigning there is more we need to find out.

  • rate this
    +4

    Comment number 264.

    So how come I can't steal these amounts and get away scot-free?

    Best law money can buy....

 

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