Barclays chairman quits over Libor, chief executive clings on
LONDON - Reuters
CEO Bob Diamond (L) poses for a photograph with ex-CEO John Varley and Chairman Marcus Agius (R), after being named as the company’s next chief executive officer in Sept 2010. Agius resigned from his post. REUTERS photoBarclays Plc Chairman Marcus Agius quit yesterday, saying “the buck stops with me” after an interest rate rigging scandal dealt “a devastating blow” to the bank’s reputation.
Agius, chairman for 5-1/2 years, is the first major scalp from the scandal, which is likely to draw in more banks and potentially the regulatory authorities, but his resignation did not take the heat off Chief Executive Bob Diamond, who is under pressure to go, too.
“The buck in Barclays stops with Bob Diamond, and it is Bob Diamond who must accept responsibility,” said John Mann, a Labour politician who is part of a panel of lawmakers who will grill Diamond on June 27 and Agius on June 28.
“He (Diamond) must resign. He’s got to go. There is no role for people like him if banking is to be trusted again in this country and if British banking is to restore its tarnished reputation in the world, which of course is of great importance to our economy,” Mann said on Sky News.
Diamond and Agius have also faced calls from some shareholders to resign after Barclays was last week fined $453 million by British and U.S. regulators for submitting inaccurate submissions on the Libor interest rate.
Barclays has admitted that some of its traders attempted to manipulate the setting of the London interbank offered rate (Libor), which is used worldwide as a benchmark for setting prices on about $350 trillion of derivatives and other financial products.
“Last week’s events - evidencing as they do unacceptable standards of behaviour within the bank - have dealt a devastating blow to Barclays reputation ... The buck stops with me, and I must acknowledge responsibility by standing aside,” Agius said in a statement.
When Diamond and Agius appear before the parliamentary committee this week they are likely to be quizzed on what the Bank of England (BoE) and other regulators knew.
Details released in documents last week could prove embarrassing to the BoE, after sources said a key conversation held in October 2008 cited in the documents was between Diamond and BoE Deputy Gov. Paul Tucker.
Some people at Barclays mistakenly believed the bank had been granted permission to submit artificially low Libor estimates after that conversation, the documents released last week showed.
More than a dozen other banks are being investigated in the long-running global probe by authorities in North America, Europe and Japan, including Citigroup, HSBC, UBS and Royal Bank of Scotland. Analysts and bankers expect more big fines.
Barclays has admitted it submitted artificially low estimates of its borrowing costs from late 2007 to May 2009 because it thought rivals were doing the same and higher submissions would make it appear to be in trouble.
Between November 2007 and October 2008 some Barclays employees raised concerns with the British Bankers’ Association - the UK banking lobby group that is also responsible for setting Libor - the Financial Services Authority, the BoE and the Federal Reserve Bank of New York regarding its concern that Libor rates were being set too low, U.S. Department of Justice documents said.
It said the employees did not provide “full and accurate information” to the authorities. Barclays said it would launch an audit of its business practices, led by Michael Rake, its senior independent director, who will move up to deputy chairman.