Markets unfazed by Bob Diamond’s grilling by MPs on Libor scandal

By ERIKKA ASKELAND
Published on 05/07/2012 00:00

ANDREW Tyrie’s Treasury select committee failed to land a serious blow on Barclays Bank or its former chief executive yesterday as markets shrugged off attempts to get to the bottom of the Libor-rigging crisis.

Shares in Barclays finished down just slightly as markets closed before Bob Diamond completed his two-and-a-half hour grilling by MPs.

Banking shares closed lower across the board, with Barclays down 1.1p at 166p. Ahead of the grilling, analysts at Espirito Santo said the “probability of any litigation being successful against Barclays appears to be quite low, meaning ultimate damages against the banks, and Barclays in particular, might not be very material”.

Nevertheless, Oriel Securities cut its target price on the bank’s shares, saying it expects the former profit powerhouse of the group, Barclays Capital, to be wound down.

The lender has seen around £3 billion wiped from its market value as the Libor-fixing affair escalated in the past week.

Despite branding traders’ efforts to manipulate Libor as “reprehensible behaviour” that made him “physically ill”, Diamond admitted that the bank had lowered key lending rates in October 2008 amid fears the UK government might nationalise the lender during the financial crisis. He said: “Whitehall would think we couldn’t fund and must nationalise the bank.”

Diamond said the conversation with the Bank of England’s Paul Tucker came shortly before the bank secured funding from Abu Dhabi investors on 31 October, implying it may not have completed the deal had concerns over Barclays’ financial health spread.