Bob Diamond Exposes

http://www.proactiveinvestors.com/companies/news/31449/bob-diamond-says-barclays-not-the-only-culprit-in-libor-scandal-31449.html

Bob Diamond says Barclays not the only culprit in Libor scandal

11:48 am by Jamie Nimmo
Former Barclays (LON:BARC) chief executive Bob Diamond told MPs today he was “physically ill” when he found out about the Libor rate-rigging that cost the bank a record £290 million in fines.

The American, who quit the bank yesterday following the furore over the scandal, told the Treasury Select Committee that the actions of a small minority of traders at the bank was “reprehensible” and “wrong” and he was “angry” at the activity of those individuals.

He sought to separate the actions of a small minority of traders from the “hard work” by thousands of Barclays workers, adding that these traders “were acting on behalf of themselves”, not for the bank’s benefit.

He told the Committee that there was “no excuse” for the activity of the rate-riggers and said he was “not happy about it”, but added rigging inter-bank lending rates was not limited to Barclays, calling it an “industry-wide problem”.

Diamond insisted that Barclays’ rates during 2008, despite being rigged, were higher than those of other banks during the period under investigation and he was worried that other banks in worse financial shape were posting lower borrowing rates.

His concern was UK government officials would see the bank’s higher rates as an indication it was having financial trouble and even possibly nationalise it as a result, as it had with Lloyds (LON:LLOY) and Royal Bank of Scotland

"If Whitehall was told 'Barclays is at the highest of Libor', they might say to themselves, 'my goodness, they can't fund, we need to nationalise them,” said Diamond.

He highlighted that Barclays managed to avoid borrowing from the government, while other banks sought bailouts at the peak of the financial crisis in 2008.

MPs grilled the former bank boss over a 2008 memo in which Diamond implied the Bank of England or government officials gave Barclays the green light to lower its lending rates to make its financials seem more robust.

Diamond, under the pseudonym ‘RED’, wrote that Paul Tucker, the Deputy Governor of the Bank of England told him “it did not always need to be the case that we [Barclays' Libor rates] appeared as high as we have recently”.

He said he left the top job with the best interests of Barclays and its workers in mind in an effort to protect the brand.

Diamond told MPs that although he was fed daily reports on Libor, he only found out some traders were tweaking rates during the investigation this month.

Barclays chairman Marcus Agius resigned on Monday, followed by Diamond and COO Jerry del Missier yesterday in the wake of the scandal.