Barclays ex-CEO faces grilling in UK parliament

Diamond also likely to be quizzed about severance package

Bob Diamond was set to face tough questions from British lawmakers on Wednesday, the day after he quit as Barclays chief executive and a bank rate-rigging scandal claimed a third top-level scalp.

Diamond, 60, stepped down from the top job on Tuesday over revelations that Barclays traders tried to manipulate interbank lending rates.

Barclays chief operating officer Jerry del Missier also resigned hours later over the affair, which claimed the job of the bank's chairman Marcus Agius on Monday.

Diamond's appearance before parliament's Treasury Select Committee from 1300 GMT is likely to last several hours.

Lawmakers are likely to probe issues including whether the Bank of England (BoE) was implicated in the manipulation of Libor -- the rate at which banks offer to lend money to each other.

On Tuesday, Barclays released Diamond's account of a telephone call he had with Paul Tucker, the deputy governor of the BoE, in 2008.

According to Diamond's summary of the call, Tucker expressed concerns that Barclays' Libor submissions were "towards the top end of Libor pricing."

"Tucker stated... that it did not always need to be the case that we appeared as high as we have recently," Diamond wrote in the note.

According to Barclays, del Missier interpreted this as an instruction from the BoE to manipulate the rate, though Diamond did not.

Agius told reporters on a conference call Tuesday that Missier had been "the most senior officer (at Barclays) who gave instructions to lower Libor rates and that obviously puts him in a very difficult position."

Former treasury minister Paul Myners said on Wednesday that he believed the BoE would have a recording or formal minutes of the conversation between Tucker and Diamond.

"We will find the answer to this quite quickly," Myners, a minister in the Labour government which was in power at the time of the controversy, told BBC radio.

The central bank did not immediately respond to a request for comment.

Diamond is also likely to face questions about the size of his severance package from Barclays.

Deputy Prime Minister Nick Clegg told the BBC Wednesday that "many people will be dismayed" if Diamond received a handsome pay-off, adding to intense political pressure on Barclays over the affair.

Diamond was one of the world's highest paid bankers, last year earning a package worth £17.7 million.

Barclays said Tuesday that his severance package was "still under discussion" but Sky News reported that he will be asked to give up nearly £20 million in shares promised to him in previous years but not yet awarded.

The bank was last week fined £290 million ($455 million, 360 million euros) by British and US regulators for attempted rigging of the Libor and Euribor interest rates.

Libor is a flagship London instrument used throughout the world, while Euribor is the eurozone equivalent. The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money.

Manipulating the rate could have given the impression that the bank was in a stronger position financially than it actually was.

Agius is staying on in his job to lead the search for Barclays' new chief executive, while Diamond and Missier have resigned with immediate effect.

Explaining his decision to quit after 18 months in the top post, Diamond said in a statement: "The external pressure placed on Barclays has reached a level that risks damaging the franchise -- I cannot let that happen."

Raising suspicions of possible wider rigging, it emerged at the weekend that bailed-out Royal Bank of Scotland had sacked four traders over their alleged involvement in a similar affair.

Britain's Serious Fraud Office on Monday announced that it was considering whether to bring criminal prosecutions over the issue, while Prime Minister David Cameron has announced a parliamentary inquiry into the scandal.

Lawmakers will vote on Thursday on whether to back calls from the main opposition Labour party to set up a judge-led inquiry similar to the press ethics probe triggered by phone-hacking at Rupert Murdoch's media empire.

  • Twitter
  • submit to reddit


Most Popular in News

Emirates 24|7

In Case You Missed It ...

Happiness Meter Icon