Barclays chairman quits as scandal over interests rates claims first scalp

The chairman of a leading British bank is set to quite today as an interest-rate rigging scandal takes its first major scalp and threatens to widen to other banks, raising questions about the involvement of the Bank of England.

The resignation of Barclays PLC chairman Marcus Agius, is expected today, a person familiar with the matter said. Pressure has built on him and CEO Bob Diamond to quit following a £290m (€360m) fine for Barclays by British and US regulators last week for submitting inaccurate submissions on the Libor interest rate.

Meanwhile, British taxpayer-backed Royal Bank of Scotland has sacked 10 of its traders over their alleged role in the Libor-fixing scandal.

The revelation comes after the owner of Ulster Bank confirmed it is being investigated for manipulating the rates at which banks lend to each other.

The date on which the traders were removed from their posts is not known. RBS has not commented on the sackings. The revelation comes amid speculation over the scale of the rate-rigging probe in the UK and internationally in the wake of the Barclays settlement last Wednesday.

Barclays boss Bob Diamond is preparing to face a panel of MPs over the controversy on Wednesday.

He is expected to be grilled on what actions the bank is taking against staff involved. Calls are mounting for criminal proceedings to be taken against anyone found to have manipulated the Libor interbank lending rate.

Ministers have also announced an independent review into the inter- bank lending rate after the rigging scandal, but a wider inquiry into the banking industry has been urged by Labour leader Ed Miliband.

The British government said the independent review will consider the future operation of the Libor rate and the possibility of introducing criminal sanctions for its manipulation.

Treasury sources said its review, to be headed by an as-yet-undisclosed independent figure, would ensure a speedy response to the issue, resulting in amendments to the Financial Services Bill this summer.

Ministers are considering setting up a separate review into the professional standards of bankers.

Mr Miliband insisted the public would not accept anything less than a full-scale independent inquiry into the culture and practices of banking.

Barclays was fined £290m (€360m) by regulators in the UK and the US for manipulating the rate at which banks lend to each other in the first of two scandals this week.

On Friday, the FSA revealed separately that Barclays, HSBC, RBS and Lloyds Banking Group had agreed to pay compensation to customers who were mis-sold interest-rate hedging products.

Some 28,000 of the products have been sold since 2001 and may have been offered as protection — or to act as a hedge — against a rise in interest rates without the customer fully grasping the downside risks. Serious Fraud Office investigators are in talks with the regulator over the scandal.