Libor scandal: Barclays chief Bob Diamond resigns amid calls for Leveson-style investigation
Bob Diamond today resigned as chief executive of Barclays with immediate effect in the wake of the rate-rigging scandal.
• US banker bows to pressure and steps down
• David Cameron announces parliamentary inquiry into banking following Libor scandal
• Labour calls for full, independent investigation similar to that of the Leveson inquiry
• SFO and FSA aim to conclude Libor probe within a month
The US banker, who had faced mounting calls to step down, said: “The external pressure placed on Barclays has reached a level that risks damaging the franchise.”
He added: “I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth.”
Barcalys was fined £290 million by UK and US regulators for manipulating the Libor, the rate at which banks lend to each other.
Marcus Agius - who announced his decision to resign yesterday - will lead the search for a new chief executive.
Mr Diamond showed no sign of stepping down yesterday as he pledged to see an internal review into Barclays’ practices through to implementation.
The 60-year-old, who joined the bank 16 years ago, said: “My motivation has always been to do what I believed to be in the best interests of Barclays. No decision over that period was as hard as the one that I make now to stand down as chief executive.”
He went on: “I know that each and every one of the people at Barclays works hard every day to serve our customers and clients. That is how we support economic growth and the communities in which we live and work.”
Mr Diamond confirmed he would still appear before the Treasury Select Committee tomorrow to answer questions over the rate-fixing allegations which ultimately led to the Government yesterday launching a parliamentary probe into banking culture.
He added: “I leave behind an extraordinarily talented management team that I know is well placed to help the business emerge from this difficult period as one of the leaders in the global banking industry.”
Meanwhile, David Cameron’s opponents said the parliamentary probe was not enough. Labour wants a full, independent investigation, similar to the Leveson inquiry into media ethics.
As the storm continued, Barclays chairman Marcus Agius resigned yesterday morning and announced an internal review of the bank’s “flawed” practices, after it was fined £290 million last week for attempting to manipulate lending rates.
The Serious Fraud Office turned up the heat by confirming it is looking into potential breaches of the Fraud Act and is “considering whether it is both appropriate and possible to bring criminal prosecutions”.
Mr Cameron then told MPs a parliamentary inquiry would “get to the truth quickly”, with powers to summon witnesses under oath. He said: “This is the right approach because it will be able to start immediately, it will be accountable to this House and it will get to the truth quickly, so we can make sure this can never happen again.”
But Labour leader Ed Miliband said the only way to rebuild trust in the banking system was with a full, independent inquiry.
“However able or distinguished, politicians investigating bankers will not command the consent of the British people,” he said. “People are understandably angry about the way their banks let them down and I don’t believe the proposed way forward is the way we can build the consensus that is required for change.”
Chancellor George Osborne later announced bankers could face jail under new laws to be rushed through parliament. He told MPs “urgent changes” were needed to the regulation of the Libor (London inter-bank offered rate) to ensure the authorities had the power to ensure bankers caught fiddling it in future ended up in court.
Martin Wheatley, head of the Financial Conduct Authority, is to lead a review. Mr Osborne said it would make “initial recommendations on the transparency on the process surrounding the setting and governance of Libor”.
He went on: “The review will also look at the adequacy of the UK’s civil and criminal sanctioning powers with respect to financial misconduct and market abuse with regards to Libor.
“It will assess whether these considerations apply to other price-setting mechanisms in financial markets to ensure that these kinds of abuses cannot occur elsewhere in our financial system.”
The review will report this summer so the current Banking Reform Bill can be changed to give the “regulators the powers they so clearly need”.
The bill was drawn up to implement the recommendations of the Vickers review of the banking system after the crisis of four years ago. Its central change will see banks forced to separate their high street retail banking business for standard savers from the more risky “casino” investment banking, which brought about the collapse.
“The review is essential in ensuring we mend the broken regulatory system introduced by the last government which allowed these abuses to happen,” the Chancellor said.
Mr Osborne also confirmed the government would propose amendments to the Financial Services Bill to ensure fines paid by banks in future went to the taxpayer. It will be backdated to include the penalty imposed on Barclays by the Financial Services Authority last week.
Libor is set on a daily basis by panels of banks and used to help set “swap rates” – the borrowing rate between financial institutions that is ultimately used to price a vast range of products, such as corporate loans and fixed-deal mortgages.
Taxpayer-backed Royal Bank of Scotland has sacked four staff over their alleged role in Libor-fixing. The bank declined to comment yesterday but sources said the sackings were made at the end of last year.
However, RBS chairman Sir Philip Hampton welcomed the inquiry announced yesterday.
He said: “The public’s anger at some of the things that have happened in the banking industry is very obvious and I think some process, some formal process, to address that anger and to address some of the evident failings of the banking industry is very sensible.”
Barclays shares closed 3 per cent higher yesterday, after taking a hammering last week, as investors appeared to take cheer from Mr Agius’s resignation.
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Saturday 18 May 2013
Temperature: 9 C to 13 C
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Wind direction: North east
Temperature: 9 C to 18 C
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Wind direction: North east