Financial watchdog 'warned Barclays about Diamond'

The UK's City watchdog warned Barclays two years ago that appointing Bob Diamond as chief executive could prove unsuitable, documents revealed today.

Hector Sants, the then head of the Financial Services Authority (FSA), told former Barclays chairman Marcus Agius that the regulator agreed to Mr Diamond's appointment on the grounds that a Libor-rigging investigation had no "adverse effect".