Cable urges shareholders to get 'stronger grip' on banks

 

Business Secretary Vince Cable has urged shareholders in British banks to “get a stronger grip” on the boards and executives responsible for “systemic abuse”.

He said that nobody at Barclays was prepared to take responsibility for the rate-rigging scandal that has engulfed the company in recent days and that shareholders ought to take action.

Mr Cable's comments came as Bob Diamond, the bank's embattled chief executive, prepares to face a panel of MPs over the controversy on Wednesday.

Ministers have also announced an independent review into the inter-bank lending rate in the wake of revelations that it was rigged by Barclays and other financial institutions.

Writing in an article for The Observer, Mr Cable said: “Regulators are a backstop: they don't own banks.

“The governance at the top of our leading banks has been shown to be lamentably weak. No one at the top of Barclays will take responsibility for systemic abuse.”

He added: “Shareholders, the owners, have a major responsibility here. I am bringing in legislation to strengthen their control over pay and bonuses, through binding votes, but shareholders have to get a stronger grip on weak boards and out-of-control executives.”

Mr Diamond is facing growing demands for his resignation in the wake of the scandal and there appeared to be moves by investors against the bank's chairman, Marcus Agius. Both are to be questioned by the Treasury Select Committee this week.

The government said the independent review will consider the future operation of the so-called Libor rate and the possibility of introducing criminal sanctions for its manipulation.

The move did not satisfy Labour, however, whose leader Ed Miliband insisted the public would not accept anything less than a full-scale independent inquiry into the culture and practices of banking.

His call came after the Financial Services Authority uncovered “serious failings” in the sale of complex financial products to small businesses, just days after the rate-rigging affair emerged at Barclays.

Taxpayer-backed Royal Bank of Scotland has also confirmed it is being investigated for manipulating the rates at which banks lend to each other.

Treasury sources said its review, to be headed by an as-yet-undisclosed independent figure, would ensure a speedy response to the issue, resulting in amendments to the Financial Services Bill this summer.

Ministers are considering setting up a separate review into the professional standards of bankers.

Prime Minister David Cameron said the Government would ensure “the criminal law can go wherever it needs to”.

Asked about calls for a wide-ranging inquiry, he said: “Let's take our time, think this through carefully... That's what I'm determined to do, and that's what we will do.”

But Mr Miliband said the Prime Minister was “out of touch” and warned that voters would not accept “the establishment closing ranks”.

He called for an inquiry along the lines of Lord Justice Leveson's into media ethics and practices.

“I have news for David Cameron - the people of this country want a moment of reckoning for our banks,” he told a Fabian Society conference in London.

“The British people will not tolerate the establishment closing ranks saying we don't need an inquiry.

“They want a light shone into every dark corner of our banking system. They want bankers held to account. They want the system rebuilt.

“Nothing less than a full public inquiry can do that. Sticking-plaster solutions will not heal this wound.”

Barclays was fined £290 million by UK and US regulators for manipulating the rate at which banks lend to each other in the first of two scandals to rock the City this week.

On Friday, the FSA revealed separately that Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking Group had agreed to pay compensation to customers who were mis-sold interest-rate hedging products.

Some 28,000 of the products have been sold since 2001 and may have been offered as protection - or to act as a hedge - against a rise in interest rates without the customer fully grasping the downside risks.

Serious Fraud Office investigators are in talks with the regulator over the scandal.

PA

Independent Comment
blog comments powered by Disqus
Top stories
News in pictures
World news in pictures
UK news in pictures
UK news in pictures
More stories
       
Independent
Travel Shop
Lake Como and the Bernina Express
Seven nights half-board from £749pp Find out more
Dubrovnik and the Dalmatian coast
Seven nights half-board from only £859pp Find out more
Prague city break
Three nights from only £199pp Find out more
 
Independent Dating
and  

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

iJobs Job Widget
iJobs General

FX Options Front Office Java / C# Developer

£500 - £600 per day: Orgtel: FX Options Front Office Java / C# Developer - Ba...

Project Manager - Front Office - Regulatory IT

£600 - £700 per day: Orgtel: Project Manager - Front Office - Regulatory IT C...

Lighting Design Engineer

£33000 - £35000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Are you an Primary NQT looking for your first role in Essex?

£21000 - £22000 per annum: Randstad Education Chelmsford: NQTs required now fo...

Day In a Page

Babies behind bars: A Palestinian fertility doctor has become an unlikely hero by helping women conceive – even though their husbands are in jail

Babies behind bars

A Palestinian fertility doctor has become an unlikely hero by helping women conceive – even though their husbands are in jail
Sonic youth: The high-pitched sound alarm for under 25s

Sonic youth: The high-pitched sound alarm

Is Mosquito, the alarm only under-25s can hear, a blessing or a bane?
The art of living in small spaces: Architects are learning how to make less, more

The art of living in small spaces

Space in cities at a premium so architects are learning how to make less, more...
Special report: The story of Sir Mervyn King's reign at the Bank

The story of Sir Mervyn King's reign at the Bank

After four 'nice' years as Governor of Bank of England, things turned decisively nasty
Zombie nation: Our enduring fascination with a world full of death and destruction

Zombie nation: Our fascination with death and destruction

A new season of shows on Radio 4 is inspired by dark tales of future dystopias. Meanwhile, zombies are marauding in the multiplexes...
Martin Stephen: 'Ofsted says comprehensives are failing the most able but teaching bright children isn't rocket science'

'Teaching bright children isn't rocket science'

It doesn't take a selective system to nurture the best minds, says a former head of St Paul's boys' school.
The retail empires strike back: Can new technology lure us back to the high street?

Can technology lure us back to the high street?

The high street has been bruised and battered by online firms but in-store technology is helping to enliven the retail experience...
The 10 Best new smartphones

The 10 Best new smartphones

Photos, films, music, apps and browsing - the latest mobiles can do it all
Jenson Button: Downbeat driver cannot wait to put season behind him

Jenson Button: Downbeat driver cannot wait to put season behind him

McLaren man admits 'failed gamble' with car has left him pinning hopes on 2014 campaign
James Lawton: Firmer fist will be required to win Champions Trophy final battle with stouter foe

James Lawton

Firmer fist will be required to win Champions Trophy final battle with stouter foe
'To farm I have to rape the countryside. It’s got to be wrong': The true effect of the badger cull

The true effect of the badger cull

'To farm I have to rape the countryside. It’s got to be wrong'
Theatre review: Daniel Radcliffe gives an admirably honest performance in Michael Grandage's The Cripple of Inishmaan

First night: The Cripple of Inishmaan

Daniel Radcliffe gives an admirably honest performance in Michael Grandage's comedy
Girls Guides drop religious reference but pledge to self and the Queen

Guides drop religious reference but pledge to self and the Queen

After 103 years, organisation changes oath to welcome 'all girls, of all faiths, and none'
Steve Tongue: Joe Kinnear was one of the boys and a breath of fresh air... 21 years ago

Steve Tongue

Joe Kinnear was one of the boys and a breath of fresh air... 21 years ago
Chris Froome: Free from 'pain in neck' after Bradley Wiggins' exit

Chris Froome: Free from 'pain in neck' after Wiggins' exit

Sky's lead rider says he is in fantastic form for the Tour and happy pecking order debate is over