Barclays boss Bob Diamond under intense pressure to quit

 

The Barclays boss Bob Diamond was under intense pressure to resign today after David Cameron and Ed Milliband said he had “serious questions to answer” in wake of interest rate fixing scandal.

Mr Diamond said yesterday he would not take his multimillion-pound bonus this year after the bank was caught taking part in a conspiracy to manipulate key borrowing rates for years. The exposure yesterday of the scandal will cost Barclays £290m in fines.

But today the leaders of both main political parties piled pressure on Mr Diamond, as shares in the bank appeared to be in free fall. By lunchtime the stock was down by more than 15 per cent.

Speaking during a visit to West Yorkshire Mr Cameron said the whole management team at Barclays had “some serious questions to answer”

“Who was responsible? Who was going to take responsibility? How are they being held accountable? These are issues they need to determine and determine quite rapidly,” he said.

In the House of Commons George Osborne said the Financial Services Authority was liaising with the Serious Fraud Office on any potential prosecutions but admitted that “fixing” the Libor borrowing rate was not a criminal offence in Britain.

He said that the FSA’s investigation was still ongoing and was part of an international probe into the manipulation of rates.

It is possible that bankers in Britain could be prosecuted abroad.

He said: “It is clear that what happened in Barclays and potentially other banks was completely unacceptable, was symptomatic of a financial system that elevated greed above all other concerns and brought our economy to its knees.”

“It is clear that the FSA's investigation demonstrates systemic failures at the heart of the financial system at the time.”

Downing Street said it welcomed the announcement of an inquiry by the Treasury Select Committee which will call Mr Diamond to give evidence.

Andrew Tyrie, chairman of the committee said: “What is now left of trust between the public and the banks?”

The Labour leader Ed Miliband went further and called for criminal prosecutions.

“When ordinary people break the law they face charges, prosecution and punishment. We need to know who knew what when, and criminal prosecutions should follow against those who broke the law,” he said.

He added: “This cannot be about a slap on the wrist, a fine and the foregoing of bonuses. To believe that is the end of the matter would be totally wrong.”

Lord Oakeshott, a former Liberal Democrat Treasury spokesman, described the bank as “a casino that was rigging the wheels and loading the dice”.

“If Bob Diamond had a scintilla of shame, he would resign,” he said. “If Barclays' board had an inch of backbone between them, they would sack him.”

Investigators from the US and the UK announced yesterday that Barclays traders routinely manipulated one of the world's most important interest rates, affecting everything from mortgage rates to the value of complex financial derivatives, all in the hope of increasing their trading profits and their own yearly bonuses.

At one point, Barclays was lying "on an almost daily basis" in the information it published to the market, according to a US regulator.

Mr Diamond, whose £28.3m pay package last year caused a political and public outcry, said he and three lieutenants would take "collective responsibility" for the scandal and would not ask for a bonus for 2012.

The bank has fired some of the people involved, although it declined to give details last night. "Nothing is more important to me than having a strong culture at Barclays," Mr Diamond said. "I am sorry that some people acted in a manner not consistent with our culture and values." Jerry del Missier and Rich Ricci, who share the running of Barclays' investment banking division, and the company's chief financial officer, Chris Lucas, will also forgo bonuses. Last year, Mr del Missier and Mr Ricci each received packages worth more than £6m.

The British Financial Services Authority and the Commodities Futures Trading Commission (CFTC) and the Department of Justice (DoJ) in the US have been investigating Barclays and other banks since the credit crisis revealed suspicious practices around the setting of an important interest rate called Libor.

Libor – London interbank offered rate – is calculated based on what an élite panel of banks says it costs them to borrow money from each other for a short amount of time. That figure is a cornerstone of the credit markets, and everything from mortgage rates to small-business loans is affected by it.

Crucially, Libor also affects the price of trillions of dollars of financial derivatives of the kind traded at Barclays – giving the bank a financial incentive to manipulate the rate.

The investigation uncovered dozens of email exchanges in which traders persuaded their colleagues to submit an artificial rate, just to benefit their trading positions. "Done... for you big boy," one Barclays employee says, to a trader, after such a request.

The practice was so widely used that traders sometimes requested a fake Libor submission as a favour to a former colleague who called in for help to increase profits on trading positions at their new hedge fund or bank.

Barclays agreed to pay £59.5m to the FSA to settle the investigation, and the penalties in the US are even steeper. The CFTC levied a fine of $200m (£129m) and the DoJ will receive $160m from the bank.

The CFTC opened the investigation into the manipulation of Libor during the credit crisis, after suspecting banks were not playing by the rules. In 2008, when banks were finding it hard to borrow money from each other at any rate, Libor seemed to stay artificially low.

Other banks are still under investigation.

The findings set out yesterday show the misconduct went back further than previously believed. In the wake of the collapse of Lehman Brothers, when financial markets entered a full-blown panic, the CFTC said, Barclays submitted artificially low rates "on an almost daily basis" at the instruction of an unnamed member of senior management.

Barclays had been submitting figures that were higher than the other banks on the panel, but by admitting that it had to pay higher-than-average rates, Barclays attracted rumours that it was having financial difficulties. Senior employees ruled that the bank should instead lie about the rate.

Start your day with The Independent, sign up for daily news emails
News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
Dominique Alderweireld, also known as Dodo de Saumure, is the owner of a string of brothels in Belgium
newsPhilip Sweeney gets the inside track on France's trial of the year
News
Cumberbatch was speaking on US television when he made the comment (Getty)
people
PROMOTED VIDEO
Life and Style
tech
Arts and Entertainment
Tom DeLonge, Travis Barker and Mark Hoppus of Blink-182 pictured in 2011.
musicBassist Mark Hoppus and drummer Travis Barker say Tom Delonge is 'disrespectful and ungrateful'
Sport
football
Arts and Entertainment
Olivia Colman and David Tennant star in 'Broadchurch'
tvBroadchurch series 2, episode 4, review - contains spoilers
Sport
cyclingDisgraced cycling star says people will soon forgive his actions
News
Britain's Prince Philip attends a Garden Party at Buckingham Palace in London
people
Arts and Entertainment
Ed Sheeran will play three sell-out gigs at Wembley Stadium in July
music
News
i100
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
Lena Dunham posing for an official portrait at Sundance 2015
people
Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
Sport
Bradford City's reward for their memorable win over Chelsea is a trip to face either Sunderland or Fulham (Getty)
football
News
Lars Andersen took up archery in his mid thirties
video
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea