Barclays Bank Former Chief Faces Parliamentary Questioning Over Rate-rigging Scheme

Barclays Bank Chair Marcus Agius has resigned amid revelations related to an interest-rate rigging scandal. Banks function as a law unto themselves. The scandal is international in scope., a photo by Pan-African News Wire File Photos on Flickr.

Barclays' ex-boss faces parliamentary grilling

Published July 04, 2012
Associated Press

LONDON – The former chief executive of Barclays will face a grilling later Wednesday when he is quizzed by an influential group of British lawmakers over the bank's manipulation of interbank lending rates.

Bob Diamond, who resigned on Tuesday, is set to be asked about a conversation he had in 2008 with Paul Tucker, the deputy governor of the Bank of England, about Barclays reporting higher borrowing costs than other banks. Barclays followed up the resignation with the release of a memo in which Diamond says Tucker told him that "it did not always need to be the case that we appeared as high as we have recently."

Barclays says a subordinate mistakenly thought the central bank had ordered Barclays to report lower rates.

Diamond, Barclays' chairman Marcus Agius and Chief Operating Officer Jerry del Missier have all resigned this week over the scandal.

Pressure had been building on the bank since last week when U.S. and British regulators imposed fines totaling $453 million against Barclays for false reporting of its borrowing costs between 2005 and 2009.

Those reports, along with those of other banks, feed into calculation of the London interbank offered rate, or LIBOR, a key market index.

Barclays has said it suspected that other British banks were reporting lower than accurate borrowing rates at the height of the credit crisis. Lower rates would tend to indicate that lenders had confidence in those banks. Barclays has said its higher reports generated rumors that it was in trouble.

The release of Diamond's memo has also piled the pressure on the Bank of England as it raises questions about whether the central bank was aware of reports that banks were giving false readings of borrowing costs and, if so, why it apparently did nothing about it.

The Bank of England has declined to comment on a BBC report that the governor, Mervyn King, joined with Adair Turner, chief executive of the Financial Services Authority, in advising Barclays that Diamond had to go.