Barclays unfairly singled out: Diamond

The former head of Barclays apologised for the “reprehensible” behaviour of his traders who fixed interest rates, but told British MPs his bank was unfairly singled out after coming forward to admit wrongdoing.

Bob Diamond, 60, quit this week after Barclays agreed to pay nearly half a billion dollars in fines for manipulating the interest rates at the heart of the global financial system.

British politicians have seized on the case as a symbol of a culture of greed that has poisoned the financial industry. Newspapers have highlighted emails disclosed in the case which show traders congratulating each other for fiddling figures with promises of champagne.

Appearing thoughtful and humble before a parliamentary committee, the man who until Tuesday was one of the world’s highest paid and most powerful financial executives with an aggressive reputation acknowledged “inexcusable” behaviour among his group’s traders. “When I read the emails from those traders, I got physically ill. That behaviour was reprehensible, it was wrong. I am sorry, I am disappointed and I am also angry.”

He said those involved in rigging interest rates would be subject to criminal investigation and should be “dealt with harshly”.

The wrongdoing was “not representative of the firm that I love so much”, the American banker said.

“This week the focus has been on Barclays because they were the first,” Diamond said, describing years of co-operation with regulatory agencies to uncover the practice.

The bank’s decision to co-operate with regulators appeared to have been designed to limit damage but it appeared to have backfired, hurting Barclays’ reputation and costing Diamond his job, banking analysts said.

Barclays acknowledged that its traders colluded with others to manipulate the London Interbank Offered Rate, or Libor, the rate that big banks say they borrow from each other which underpins trillions of dollars in global contracts.

In addition to the manipulation by traders, which took place from 2005-2009, Barclays also admitted it deliberately understated its submissions of Libor rates at the height of the 2008 financial crisis to make its balance sheet look stronger.

MPs questioned Diamond over a 2008 memo, in which he appeared to suggest that the Bank of England or the British government might be giving the firm the nod to report that it was able to borrow money at lower rates to make it look better.

At the time, Barclays was reporting Libor funding costs that were among the highest of the large banks, even though others were in much worse shape.

Diamond wrote in the memo that the deputy governor of the Bank, Paul Tucker, told him “it did not always need to be the case that we appeared as high as we have recently”.

Barclays has said that another senior executive — chief operating officer Jerry del Missier, who also resigned on Tuesday — understood the memo as a green light to submit lower rates. Diamond said he interpreted Tucker’s call as a “heads up” that politicians were worried about the rates Barclays was reporting, but not as a green light to fiddle them.

Diamond feared at the time that if the British government believed Barclays’ costs were higher than those of other banks, it might have nationalised it, as it did with several competitors, he said.

The Bank said Tucker intended to present his own explanation of the phone call to politicians at a later hearing.

— Reuters

Osborne accuses Brown

* Members of Gordon Brown’s government were “clearly involved” in the scandal of Barclays’ manipulation of its Libor rate, George Osborne, the British chancellor of the exchequer, has claimed.

In an interview for today’s edition of The Spectator, Osborne said Brown’s inner circle have “questions to answer” about their role in the false posting of inter-bank lending rates during the bank crisis of 2008.