Barclays’ top three executives have resigned amid a deepening dispute with the Bank of England about whether the central bank pushed the lender to submit artificially low London interbank offered rates (Libor) during the financial crisis.
Robert Diamond stepped down yesterday as chief executive and Jerry Del Missier quit as chief operating officer, the lender said. Chairman Marcus Agius will also leave once he has found a replacement for Diamond, who has worked at the bank for the past 16 years.
The three are leaving after regulators fined the bank a record £290 million (R3.7 billion) for attempting to rig Libor.
Bank of England governor Mervyn King and Financial Services Authority chairman Adair Turner had intervened to force Diamond out, the BBC reported. A day before Diamond was due to appear before legislators, the lender released a note of a 2008 call purporting to show that Paul Tucker, the central bank’s then markets director, hinted that Barclays could lower its Libor quotes.
“Tucker stated that the levels of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently,” Diamond said in an October 30, 2008, e-mail to then chief executive John Varley and Del Missier.
Diamond did not believe he had received any instruction or that he gave any order to Del Missier to lower the bank’s submissions, according to evidence provided by the bank to legislators yesterday.
Del Missier concluded that the Bank of England had instructed the firm not to keep Libor so high and instructed rate-setters to lower their submissions, Barclays said.
“As a result of what he believed was a genuine misunderstanding, Jerry was the most senior officer who gave instructions to lower Libor rates,” Agius said yesterday. “That obviously puts him in a very difficult situation.”
Officials at the Bank of England could not comment immediately on the document.
UK and US regulators found Barclays “systematically” attempted to rig the London and euro interbank offered rates for profit. The Libor, which is determined by 18 banks’ daily estimates of how much it would cost them to borrow from one another for different time frames and in different currencies, is the benchmark for more than $360 trillion (R2 940 trillion) of securities.
“I don’t think anybody should underestimate the seriousness of this,” said Dominic Rossi at Fidelity Worldwide Investments, one of Barclays’ biggest shareholders. – Howard Mustoe and Svenja O’Donnell London from Bloomberg