Saturday, December 7, 2013
The Associated Press
LONDON – The former boss of Barclays, who lost his job over a financial market-fixing scandal, said Wednesday that a Bank of England official had not encouraged him to report false data at the height of the credit crunch in 2008.
Bob Diamond, former chief executive of Barclays, says a Bank of England official had not encouraged him to report false data, which drew a $453 million fine last week.
The Associated Press
Bob Diamond, who resigned as chief executive a day earlier, was grilled by a parliamentary committee about his conversation with Paul Tucker, deputy governor of the Bank of England, on Oct. 29, 2008.
That conversation, disclosed Tuesday by Barclays, has become the focus of questions about the false data submitted by Barclays between 2005 and 2009, which last week drew a fine of $453 million by U.S. and British agencies.
The question is crucial to the development of the market-fixing scandal because it would determine whether British authorities were encouraging banks to report lower than actual borrowing rates to ease market concerns over the banks' financial health.
Banks borrow from each other daily and report at what rate they got the money. A high rate can indicate a bank is having trouble borrowing money because it is in financial trouble.
Those reports are compiled into a benchmark interest rate – the London interbank offered rate, or LIBOR – used to price the rates charged on mortgages to business loans worldwide.
Diamond wrote a memo recording Tucker as saying about Barclays' borrowing rates "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."
The question was whether this was a veiled encouragement by Tucker for Barclays to report lower borrowing rates.
Diamond said he did not take it to be an order or even, as committee chairman Andrew Tyrie suggested, "a nod and a wink."
Diamond said a subordinate, Jerry del Missier, misunderstood the memo and ordered his staff to lower their reported rates. Del Missier also resigned on Tuesday, a day after Barclays chairman Marcus Agius said he was stepping down.
Tyrie noted that LIBOR fell the day after Diamond sent the memo to del Missier. But Diamond argued that was due to positive news that had buoyed spirits in financial markets and not to the borrowing rates that Barclays had submitted.
The Bank of England has said Tucker was "quite keen" to testify to the committee to give his version of the conversation.
Barclays shares closed down 0.63 percent in London, and shares in other major British banks finished lower.