Bank of England role in Barclays CEO’s resignation confirmed

Outgoing Barclays chairman Marcus Agius, testifying before the UK Parliament’s Treasury Select Committee, has stated that Bank of England governor Sir Mervyn King forced former Barclays chief executive Bob Diamond to quit last week. Agius said King had “confirmed he had no power to direct us, but said that Bob Diamond did not have the support of the regulators”.

Barclays has been fined more than $450m (£290m) for its part in manipulating Libor, the interest rate that underpins financial transactions worth hundreds of trillions of dollars. Barclays is one of a dozen global banks set to face investigations from regulatory authorities in Europe, US and Japan, but the only one so far to have admitted wrongdoing. 

In a statement, Agius said: “The Board deeply regrets the circumstances that led to Bob resigning his positions at Barclays. Despite having no personal culpability, he recognises more than anyone the negative attention that they have generated and has taken characteristically strong action to address that. These circumstances do not detract in any way from the tremendous legacy that Bob has left at Barclays, and his actions are clear indications of his commitment to the institution to which he has contributed so much.”

In a previous testimony yesterday (Monday), Paul Tucker, deputy chairman of the Bank of England, repeatedly denied the suggestion that he had discussed the inter-bank lending rate with former Labour Chancellor Ed Balls or former city envoy Shriti Vadera during October 2008.

Emails released by the Bank of England show regular contact between Tucker, Diamond and senior Downing Street official Sir Jeremy Heywood at the height of the financial crisis. After the exchange of emails, Barclays lowered its Libor rate, leading to speculation that the Bank of England had instructed Barclays to lower its Libor rate.

During his testimony yesterday, Tucker denied that he had encouraged Barclays to reduce its Libor submissions.

Today, Agius said the Libor issue was never discussed at the Barclays board meetings.

Diamond could be recalled to testify before the UK Parliament’s Treasury Select Committee, after comments by Agius seemed to contradict his statements yesterday, leaving some members of the committee convinced that Diamond had misled them.

Agius confirmed that Diamond had voluntarily waived £20m of his bonuses, though he will still get a pay-off of £2m, comprising 12 months’ pay and cash in lieu of pension. 

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