Oliver Wright: So, now that Bob Diamond has resigned, what next for Barclays?

 

When Bob Diamond and Barclays took the decision to cut a deal with international banking regulators and admit their role in the interest rate rigging scandal they thought they had made a decision in the long-term interests of the bank’s shareholders.

By ‘going first’ and admitting wrong-doing they received a reduced fine, immunity from corporate prosecution and a chance to ‘clean up’ and put the scandal behind them. In fact Barclays share rose on the news of the deal.

Nearly a week later and things look rather different. The bank is searching for a new chief executive and chairman, its shares have fallen by around ten per cent and its reputation for probity is in tatters.

It looks like one of the biggest corporate blunders in history.

So what next for Barclays and the banking sector in general?

In the short term the answer is more pain and, in the longer term, more regulation.

Tomorrow Mr Diamond will face MPs on the Treasury Select Committee for what is likely to be an uncomfortable hearing.

He will be asked what he knew and when about the Libor fixing which went on under his watch when he was running Barclays Capital.

He will also face questions about a phone conversation he had with the deputy governor of the Bank of England Paul Tucker in late 2008 after which Barclays started manipulating their Libor rate to make the bank appear more financially secure than it was.

It is hard to see how either the bankers or the regulators will come out of the hearing well.

In the coming weeks we will then see more embarrassing deals cut and fines imposed on both British and international banks for Libor fixing.

These are thought include RBS, HSBC – run by the Trade Minister Lord Green at the time and Lloyds.

All three banks now have new management since the time the fixing took place which may lessen the internal pain – but details of what they did may damage the industry in general more than the Barclays scandal.

This will lead to more regulation. The Government has already announced that it intends to look at extending the Bank of England’s powers and bring in new laws to make Libor fixing a criminal offence.

There are also likely to be additional recommendations from the Government’s newly set up Parliamentary Inquiry into banking – or a judge led inquiry if Ed Miliband gets his way.

The danger in all this is that the political and public backlash ends up damaging an industry which is vital to the country’s economic recovery.

Anger at bankers is easy. How you translate that into a sensible framework for the future is much harder.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...