The Joplin Globe, Joplin, MO

Business

Discussion

July 3, 2012

Barclays CEO Bob Diamond quits over rate-fixing scandal

Los Angeles Times (MCT)

LONDON — Bob Diamond, chief executive of Barclays, resigned Tuesday over an inter-bank rate-fixing scandal under investigation by U.S. and British financial authorities. The announcement came a day after Barclays’ chairman, Marcus Agius, quit his post for the same reason.

Jerry del Missier, the bank’s chief operating officer, followed Diamond out the door later Tuesday, announcing that he had quit the post to which he had only recently been appointed.

Barclays, one of Britain’s leading investment and retail banks, is under fire from politicians and financiers and could face criminal investigation from Britain’s Serious Fraud Office after reports last week revealed that it, along with about 20 major British and North American banks, had manipulated the LIBOR, the inter-bank borrowing rate used as a benchmark for private and corporate loans.

Investigators revealed a culture of artificially fixed rates arranged in deals between traders and banks between 2005 and 2009, covering the years of the worldwide financial crisis.

The American-born Diamond headed Barclays Capital, the investment branch of the bank during those crucial years, before being appointed CEO in 2011. Nevertheless, he has resisted offering his resignation until now. In a letter to Barclays staff Monday, he said he was committed to a “root and branch” review of the bank’s practices and pledged that the board would “establish a zero tolerance policy for any actions that harm the reputation of the bank.”

Barclays has been fined more than $450 million by the U.S. Commodity Futures Trading Commission, the U.S. Justice Department and the British Financial Services Authority.

Diamond’s resignation is effective immediately, but Agius will remain as chairman to oversee the installation of his and Diamond’s successors.

In his resignation statement, Diamond said his decision came as “the external pressure has reached a level that risks damaging the franchise - I cannot let that happen.”

He went on to say that he was “deeply disappointed that the impression created by the events of last week about what Barclays and its people stand for could not be further from the truth.”

Diamond is scheduled to face a parliamentary committee panel of inquiry Wednesday, and said he looked forward “to fulfilling my obligation to contribute to the Treasury Committee’s inquiries related to the settlements that Barclays announced last week, without my leadership in question.”

His announcement comes a day after British Prime Minister David Cameron called for a parliamentary cross-party inquiry to report by the end of the year, with an eye toward reviewing banking laws and regulations. Cameron’s proposal is staunchly opposed by the opposition Labor Party, which is demanding a wider public, judge-led independent inquiry of the type now investigating media practices and ethics over the News Corp. phone-hacking scandal.

British Chancellor George Osborne welcomed Diamond’s decision, telling the BBC that it was “the right decision for Barclays and the right decision for the country. ... I hope this is the first step toward a new culture of responsibility in British banking.”

 

Text Only
Business