You'll pay for this, David Cameron tells Barclays bosses

Politicians line up to condemn bank in rate fixing scandal

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Indy Politics

Britain's biggest banks are facing the prospect of criminal investigations, enormous fines and civil lawsuits from customers over the developing scandal of rigging interest rates.

The Prime Minister urged banking regulators to use "all the powers at their disposal" to pursue Barclays after it was fined £290m for manipulating bank lending rates. "This is a scandal. It is extremely serious. They've had a very large fine and quite rightly. But frankly the Barclays management team have some big questions to answer," David Cameron said. "How did this happen? Who was responsible? Who's going to be held accountable for it?"

Arriving at the EU summit in Brussels, he added: "I'm determined we learn all the lessons from what has happened at Barclays. People have to take responsibility for the actions and show how they're going to be accountable for those actions. It's very important that goes all the way to the top of the organisation."

Bob Diamond, the bank's chief executive who earned £17m last year, is under intense pressure to resign over the affair. At the time of the manipulation, which resulted in the alteration of home mortgage rates, he was running the part of Barclays believed to be responsible for the deals, and last night he confirmed he would appear before MPs on the Commons Treasury Select Committee to answer questions.

It has emerged that at least 20 other banks are under investigation including Lloyds, HSBC – which was run at the time by the current Trade minister Lord (Stephen) Green – and the Royal Bank of Scotland, whose chief executive was Fred Goodwin. RBS was reported last night to be facing a £150m fine but offered no comment on the claim. A Treasury source said of banks generally: "What we're hearing is that everybody was at it."

A City firm run by the former Tory treasurer and donor Michael Spencer could also be dragged into the affair, which may extend to brokers and hedge funds.

Icap has suspended one employee and placed two others on administrative leave. Regulators are liaising with the Serious Fraud Office. This could lead to criminal charges.

The scandal has spooked investors, with more than £10bn wiped off the value of British banks.