Ex Barclays boss Diamond defends rates approach

Former Barclays boss Bob Diamond today said the bank lowered key lending rates amid fears the British government would want to nationalise the lender during the financial crisis.

Former Barclays boss Bob Diamond today said the bank lowered key lending rates amid fears the British government would want to nationalise the lender during the financial crisis.

Mr Diamond, who resigned as chief executive yesterday, was giving evidence to the Treasury Select Committee on the culture he presided over at the bank as staff fiddled the key Libor rate that affects the price of mortgages and loans.

Mr Diamond said Bank of England deputy governor Paul Tucker relayed concerns from officials within Government that Barclays’ Libor rate was too high – which could be a sign of financial weakness at the bank.

He said: “Whitehall was told Barclays had the highest Libor. They would think we couldn’t fund and must nationalise the bank.”

Mr Diamond said the conversation with Mr Tucker came shortly before the bank secured funding with Abu Dhabi on October 31, implying it may not have completed had concerns over Barclays’ financial health spread.

Mr Diamond said there were 14 or 15 other banks, including nationalised lenders, who he knew had a weaker financial position than Barclays and were still submitting lower Libor rates.

Questioned over the phonecall with Mr Tucker, Mr Diamond said the phrase “Whitehall figures” referred to “officials in Government”.

Outlining his interpretation of Mr Tucker’s comments, he said: “He felt that our Libor rates, relevant to the other 15 posters, could be lower.”

But he insisted he did not feel any action had been requested.

“I didn’t feel it was an instruction,” he said.

Mr Diamond opened the session by declaring his “love” for Barclays and added: “At the core of the issues there clearly were mistakes, clearly there was behaviour that was reprehensible.”

Mr Diamond said he did not know whether Barclays chairman Marcus Agius had come under pressure from regulators to bring about his resignation.

He suggested that over the weekend he had been determined to stay at the helm of the bank.

But he added: “It was clear to me on Monday that the support wasn’t as strong and I needed to take this step.”

Mr Diamond suggested he and Barclays had been the victims of an “unfortunate series of events”, and there had been problems at other banks.

“I think there has been an unfortunate series of events in the last week around Barclays being identified as the first in what was a report that clearly showed very, very bad behaviour by groups of people.”

He insisted that senior executives had dealt with the problems “appropriately” and regulators had praised their co-operation with the investigation.

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