Friday, November 24, 2017
Business

Barclays ex-CEO says many to blame in interest rate rigging

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LONDON — Bob Diamond, former chief executive of Barclays, told a British parliamentary committee Wednesday that the manipulation of global interest rate benchmarks involving 14 traders at the bank had made him "physically sick."

But Diamond, who resigned Tuesday, also placed some of the blame for the rate manipulation scandal on regulators.

He said the bank had raised concerns multiple times with U.S. and British authorities about discrepancies over how LIBOR — the London interbank offered rate, a measure of how much banks charge each other for loans — was set. The bank was not told to stop the practice, according to Barclays' documents submitted to the British Parliament.

Diamond also sought to deflect attention from the bank's role in the authorities' continuing investigation, pointing out that other major global financial institutions also had been implicated. U.S. and British regulators, who announced a $450 million settlement with Barclays last week, are investigating the actions of more than 10 large financial institutions, including JPMorgan Chase, UBS and Citigroup.

"I can't sit here and say no one in the industry didn't know about the problems with LIBOR," he said. "There was an issue out there, and it should have been dealt with more broadly."

The 60-year-old executive, who initially appeared nervous giving his testimony, but gradually became more comfortable during the nearly three hours of questioning, batted away questions of his being solely to blame for the scandal.

"I don't feel personal culpability. What I do feel is a strong sense of responsibility," Diamond said, adding he had made the decision to resign when support from regulators and shareholders for his position at the bank began to wane.

He also implicated the Bank of England, the country's central bank, and leading British politicians.

During his testimony, Diamond described a phone call he received at the end of October 2008 from Paul Tucker, a high-ranking official at the Bank of England. According to Diamond, Tucker expressed concerns from senior politicians that Barclays had been submitting rates consistently higher than rivals, a sign of relatively poor health.

Diamond then emailed Jerry del Missier, a top deputy, about the conversation, saying that Tucker had stated that it "did not always need to be the case that we appeared as high as we have recently," according to documents released by the bank.

Del Missier, who also resigned Tuesday, subsequently directed employees to keep the submissions lower, or at least in line with rivals. His actions, some regulators say, were owed to a "miscommunication," rather than instructions from Tucker.

"I was unaware that Jerry had the impression that Tucker's phone call was taken as an instruction," Diamond said.

"I am sorry, angry and disappointed," Diamond told the parliamentary committee. "There's no excuse for the traders' actions."

Diamond is the first person implicated in the rate manipulation scandal to give evidence to the British parliamentary committee. The outgoing chairman of Barclays, Marcus Agius, and high-ranking officials from the Financial Services Authority, the country's securities regulator, and the Bank of England also are expected to testify.

In addition, the British prime minister, David Cameron, has announced a wide-ranging inquiry into the British banking sector, and expects the results to be published by the end of the year.

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