Senior executive, Jerry del Missier, has made claims that he sanctioned Libor manipulation on the behalf of chief executive, Bob Diamond, because he believed the move had been approved by the Bank of England.
This comes after Financial Services Authority’s (FSA) Andrew Bailey stated he thought Diamond’s evidence to MPs was “highly selective.” Diamond denies that his conversation with del Missier was an order to fix Libor rates.
The Treasury Committee has been made aware of accusations that Barclay’s traders have knowingly “lowballed” Libor proposals between 2005 and 2009. This evidence has cost Barclays £290m in fines already, and there is still a possibility that employees will face criminal conviction.
Allegedly, Barclays are not the only banking institution involved in this Libor scandal; it also includes several European businesses. This is a key moment to hold banks accountable for their offences during the financial crisis in 2007. The investigation into the Libor claims is said to last years.
Beginning in Canada, del Missier rose through credit derivatives to become an au fait trader. His career at Barclays lasted 15 years, and he was known for his ruthlessness in the banking world. He was a close business associate with Diamond – although not a friend – and sat on the investment banking throne. As one of Barclays top executives, his annual pay reached a royal sum of almost £50m.
When accused of complicity in the Libor scandal, he told MPs that he acted based on instructions from Mr Diamond:
“He [Bob Diamond] said that he had a conversation with Mr Tucker of the Bank of England, that the Bank of England was getting pressure from Whitehall around Barclays, the health of Barclays as a result of Libor rates and that we should get our Libor rates down and that we should not be outliers.
“I passed the instruction on to the head of the money market desk… At the time it did not seem an inappropriate action given that this was coming from the Bank of England.”
Libor deals in borrowing moulds for products such as mortgages, credit cards, and loans – this covers trillions of dollars.
“There was a culture of gaming. It had to change,” said Bailey (FSA).
“We drew the conclusion that there was a problem with this institution.”
“You could not escape the conclusion that the culture of this institution was coming from the top.”
The FSA’s chairman, Lord Turner, agrees that these reservations about Barclays’ practices were prevalent. He told the committee that he believed Barclays was “not being totally honest with us about what was going on.”
However, Labour’s Pat McFadden has accused del Missier of trying to pass the buck by attempting to “blame someone else” for his misdeeds.
MPs agreed on Monday have decided to scrutinize the Libor investigation further, and deliver a report this December. Many institutions in the US are now convening to ascertain just how much they have lost through this rate fixture, and a number have filed lawsuits, in the hope they can still recoup damages.
This guest article has been provided by SOswitch.com