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
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there