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Political Information Last Updated: Jan 14, 2020 - 12:07:47 PM

Barclays blames 'senior Whitehall figures' for Libor scandal as Bob Diamond resigns - live
Jul 4, 2012 - 6:41:45 PM

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Barclays blames 'senior Whitehall figures' for Libor scandal as Bob Diamond resigns - live

2008 email implicates Bank of England and Labour government in Libor manipulation
• Barclays briefs media on CEO's departure - 3.25pm onwards
• COO Jerry Del Missier also resigns - full details
Sir Mervyn King implicated.....
Will Diamond now 'declare war' on Bank of England?
Boris Johnson still values Diamond
Barclays statement here

Barclays chief executive Bob Diamond has stepped down following the Libor scandal. What will he tell MPs tomorrow?.... Photograph: Carl Court/AFP/Getty Images

11.43pm: We are going to wrap up the blog for now, but Graeme Wearden will be back at the helm tomorrow morning ahead of Bob Diamond's appearance before the Treasury select committee.

Live blog: recap

Before we go though, here is another summary of developments over the course of the day:

Bob Diamond has quit Barclays as the Libor rate fixing scandal escalated to new heights. He blamed the 'external pressure' that has build up on Barclays in recent days -- after MPs called for his resignation, and the government announced an inquiry into the affair.

Diamond's resignation was followed by that of Jerry del Missier. Here's the official statement. One of Diamond's key allies, del Missier has quit because he was the official responsible for telling Barclays staff they could submit lower Libor quotes back in 2008.

Diamond is expected to come out fighting for his reputation [Ron: ?!?] on Wednesday when he appears before a powerful committee of MPs. The banker is expected to unleash a wave of explosive revelations about the role of City watchdogs and senior Whitehall figures in the manipulation of crucial interest rates that landed the bank with a record £290m fine last week.

Ahead of that hearing, Barclays released an email from 2008, which appears to implicate both the Bank of England and the government in the scandal. It states that Diamond spoke to Paul Tucker of the BoE, who said that senior officials in Whitehall were concerned that Barclays was reporting excessively high daily borrowing rates in the weeks after the collapse of Lehman Brothers, and that it didn't need to always do so.

Barclays refused to comment on reports today that the Bank of England played a role in Diamond's departure. Marcus Agius, who is now temporary full-time chairman just a day after resigning, also declined to say how large a payoff Diamond will receive. There are reports that the bank wants to claw back £20m of bonuses from previous years.

Marcus Agius, who is now temporary full-time chairman at Barclays just a day after resigning, has said that he had known about libor rate fixing at his bank for 'more than two years'. He insisted that the bank acted to remove "those who took the decisions a number of years ago".

11.16pm: The Guardian's City editor, Jill Treanor, has been in touch with some final thoughts on the focus of coverage tonight:

Much of it has related to whether Paul Tucker of the Bank of England gave the impression that during the 2008 crisis it was ok for Barclays to reduce its submission to the Libor rate to avoid any idea that Barclays was in financial crisis.

The higher the rate Barclays submitted, the more financial difficulty it might be in.

But none of this explains the behaviour before the crisis - 2005 according to regulators - where the regulators produced those emails about "this is for you big boy".

10.42pm: The shadow business secretary, Chuka Umunna, is one of BBC's Newsnight's guests and says he would be "very very surprised" if anyone at the Treasury or the Bank of England had been involved in encouraging Barclays to misreport its Libor rates.

He adds that the suggestions have "a whiff of mudslinging."

Nigel Lawson, chancellor of the exchequer between June 1983 and October 1989, is one of the other guests.

Mounting a defence of the City of London, he says: "The standard of ethics on Wall Street is probably even lower than it is in the City of London."

10.37pm: The Barclays scandal has underlined the City's unmuzzled power, writes the Guardian's Seumas Milne:

Political and business powerbrokers insist it's all a problem of leadership, bad apples and a culture that has gone awry. But such cultures are generated by structures and systems – and in the case of the City, deregulated short-term profit maximisation has as good as required them.

It's certainly necessary to have a clearout of City bosses, prosecutions and wide-ranging inquiries, but only far-reaching change will clear this cesspit.

The financial system has already failed at huge economic and social cost. It has been shown to be corrupt, incompetent, rapacious and economically destructive. The City's claims to be an indispensable jobs and tax engine for the British economy are nonsense: the bailout costs of 2008-9 dwarfed the financial tax revenues of the boom years, which were below those of manufacturing even at their peak.

In fact, the banks are pumped up with state subsidies and liquidity that they are still failing to pass on in productive lending five years into the crisis.

A crucial part of the explanation is the unmuzzled political and economic power of the City: its colonisation of Whitehall and public life, effective grip on its own regulation, revolving-door pull on politicians and civil servants, and purchase of political parties. Finance has usurped democracy.

10.34pm: The Times splashes with "Barclays adrift as scandal sucks in Bank of England"

Wednesday's Times front page -

10.30pm: The Daily Mail splashes with 'Revenge of a Fallen Titan'

Wednesday's Daily Mail front page -

10.14pm: 'Diamond Let's Loose over Libor' is the FT's front page headline:

Wednesday's FT front page -

10.10pm: Diamond is expected to come out fighting for his reputation on Wednesday when he appears before a powerful committee of MPs, according to the lead story in Wednesday morning's Guardian.

The high-profile and outspoken banker is expected to unleash a wave of explosive revelations about the role of City watchdogs and senior Whitehall figures in the manipulation of crucial interest rates that landed the bank with a record £290m fine last week.

The chancellor, George Osborne, who had been putting the banker under intense pressure to quit, said his sudden resignation was "the right decision for Barclays – and for the country". "I think Bob Diamond's resignation is the first step towards the new age of responsibility we need to see." [Ron: How about some criminal prosecutions?!?]

After an extraordinary 24 hours during which the bank's chairman, Marcus Agius, quit only to be temporarily reinstated once Diamond had departed, the role of Bank of England officials in the rate-rigging scandal is likely to take centre stage in the hearing with MPs.

With Barclays in turmoil, Diamond is fighting for his own reputation, which politicians have used to symbolise the culture of greed in City banking.

Diamond, under pressure from the banking regulator and the governor of the Bank of England, Sir Mervyn King, quit after he decided he would be the lightning rod for the scandal at the hearing.

10.06pm: 'Diamond Cuts Up Rough' is tomorrow's Guardian front page splash headline.

Wednesday's Guardian front page -

9.52pm: 9.49pm: 'The Bank of England told us to do it, claims Barclays' is the headline over the lead story in tomorrow's Daily Telegraph (via Nick Sutton)

Wednesday's Telegraph front page:

9.32pm: Jill Treanor, the Guardian's City Editor, has filed a fascinating piece on the late exchanges that led to Bob Diamond's demise. Here's a snippet:

On Monday afternoon Bob Diamond rehearsed for his planned appearance before the Commons Treasury select committee.

As his public relations team ran him through question after question that the MPs were likely to fire at him, the American born banker saw that he – and his brash personality – was the main problem facing Barclays bank.

Diamond, 16 years at the bank, but only 18 months into his dream job as chief executive, spoke to a few close colleagues before setting off for home, knowing that David Cameron had used the revelations about Barclays' attempts to manipulate the London interbank offered rate (Libor) to call an inquiry into the wider banking industry.

Though regulators admit that Barclays is only one of up to 20 banks caught up in the scandal, Diamond epitomised it.

Diamond rang Barclays chairman Marcus Agius and told him it was time for him to go. It was a stunning change in stance from the defiant email to staff he had sent a few hours earlier, telling them he "loved Barclays" and was committed to putting right the wrongs exposed by regulators.

Behind the scenes bigger forces were at work. The regulators had watched the political temperature rising during the day and the Bank of England governor, Sir Mervyn King, and Lord Turner of the Financial Services Authority secretly met Agius, who had himself resigned only hours before, in the late afternoon.

You can read Jill's piece in full here.

9.12pm: Gary Hoffman (former Northern Rock CEO) is now the favourite to become the next chief executive of Barclays, [Ron: !?!] if the latest odds being offered by Ladbrokes are anything to go by.

Providing us with an update - asked for by readers - a Ladbrookes source says the gamble on Hoffman has continued in the shops and on the phones all day.

He's now the 2/1 favourite there with 97% of all bets for him.

It's a a dramatic turnaround from this morning, when the pack was headed by Antony Jenkins, the current chief executive of Barclays retail and business banking.

The odds were cut on Hoffman after Ladbrokes ttok a "decent bet" on him this afternoon at its Charing Cross branch in London.

8.47pm: The directors of Barclays are now under pressure to ensure Bob Diamond does not walk away with a multimillion-pound payoff following his forced exit from the bank, writes the Guardian's Simon Bowers. He sets the scene:

The departing Barclays boss, who has been paid a total of £98m since he joined the Barclays' board in 2006, could be in line for up to £22m if all his contractual entitlements, free shares and outstanding bonuses are honoured.

His deputy, Jerry del Missier, who also quit on Tuesday, could also be entitled to a golden goodbye running into many millions.

But Diamond is likely to have to fight long and hard if he wants to walk away with such a vast cash pile. Shareholders – who registered a 31.5% protest vote against his pay earlier this year before the rate-rigging scandal blew up – are likely to object to any large payments.

They may also demand that some of his big bonus payments from previous years – when Barclays' traders were inflating the bank's profits by attempting to manipulate the Libor rate – are also repaid.

They will be relying on Alison Carnwath, the Barclays' director who oversees directors' pay.

She is understood to have attempted to halt some of the payments made to Diamond earlier this year but her failure to do so angered shareholders.

8.39pm: The memo from Bob Diamond to his boss, chief executive John Varley, on 29 October 2008, will dominate Wednesday's session of the Treasury select committee, writes the Guardian's Nils Pratley.

It records Diamond's account of his conversation that day with Paul Tucker, a deputy governor of the Bank of England.

Nils identifies five key questions that MPs will want to ponder:

1. Was Diamond's account of his conversation with Tucker accurate?

2. Was the memo discussed further between John Varley (then Barclays chief executive), Diamond and del Missier (Diamond's closest associate at Barclays Capital)?

3. Why wasn't del Missier sacked when the board discovered his grave mistake in issuing the instruction to lower Libor submissions?

4. Did Tucker and the Bank believe the Libor market in the autumn of 2008 was riddled with false submissions? And did the Bank, explicitly or implicitly, encourage this situation?

8.18pm: Bob Diamond had been facing a "coup" which was being organised by Barclays Capital employees, according to a report from CNBC's John Carney.

In a scenario that wouldn't look out of place in a Hollywood script, the traders are said to have been former employees of Lehman Brothers, the failed investment bank taken over by Barclays Capital during the financial crisis.

Carney, who runs CNBC's NetNet blog, says that senior investment bankers in New York began to organize a coup on Monday and that several met in offices, which were formerly those of Lehman, to figure out a strategy.

He quotes one:

We were like, 'What world is he living in?'" one trader said. "How could he not see the writing on the wall?"

He was like a guy trying desperately to keep his girlfriend from breaking up with him. I was literally cringing reading [the letter]," an investment banker said.

8.09pm: Another graph to add to the mix now, courtesy of James MacIntosh, Investment Editor at the Financial Times and writer of that newspapers's 'Short View'.

The context is the 2008 telephone conversation between Paul Tucker, then deputy governor of the Bank of England, and Bob Diamond, who has claiemd that Tucker told him that "a number of senior officials in Whitehall" had expressed concern over Barclays's Libor numbers.

7.46pm: Alistair Darling, Chancellor of the Exchequer between June 2007 and May 2010, has been talking to Channel 4 News.

He said that he was not one of the "senior figures" at Whitehall who were alleged to have expressed concern back in 2008 that Barclays was reporting excessively high daily borrowing rates in the weeks after the collapse of Lehman Brothers.

"I'd find it astonishing that bank or Treasury would ever suggest this," said Darling, referring the suggestion that Paul Tucker of the Bank of England had passed on the supposed concerns of the Whitehall officials.

But while Darling was strong on manipulation of Libor rates, describing it as "indefensible and reprehensible", it was his distinctive pronounciation of Libor as "Lee-bor" that seems to have intrigued more than a few people who saw the interview. Here's a tweet from broadcaster James Max:

7.34pm: The House of Lords' rejection this evening of Labour's call for a judge-led inquiry into the bank rate-rigging scandal is a setback for Ed Miliband, although MPs will get another chance to wield influence on Thursday when they vote on Prime Minister David Cameron's proposal for a cross-party inquiry by MPs and peers.

It would led by the chairman of the House of Commons Treasury Committee, Tory MP Andrew Tyrie.

In the meantime though, former City minister Lord Myners has been telling peers that the rigging of the Libor interest rate is only just a symptom of a much wider cancer in the UK's financial services industry.

He said that since last year he has asked ministers repeatedly about the manipulation of the interest rate but has received "backhanded" responses from the Government.

Lord Myners, who was City minister under Gordon Brown between 2008 and the last general election said the terms of reference for Andrew Tyrie's joint parliamentary committee were too narrow and did not address a wider cultural shift in the banking industry.

He added: "This is not just simply a question of Libor. I first raised a written question with the minister (Lord Sassoon) about the manipulation of Libor in March of last year and got a very backhanded response from the minister on this issue. I have raised the issue several times subsequently."

But Treasury Commercial Secretary Lord Sassoon said told peers that Tyrie's investigation had been given a "very wide remit" and argued a judicial inquiry would cause delay and be very expensive.

7.22pm: Marcus Agius, who is now temporary full-time chairman at Barclays just a day after resigning, has given an interview to Sky's Jeff Randal, which has just been broadcast.

Agius said that he had known about libor rate fixing at his bank for 'more than two years' and came under pressure from Randall to explain why he did not act decisively to get rid all of those involved, including Bob Diamond.

"A number of people have gone. I am talking about those who took the decisions a number of years ago," he said.

Questioned about what the impetus had been for Diamond's eventual departure, Agius said that he had thought that his own announcement of his intention to leave "would take some of the steam out of the situation".

But the opposite occurred, he added, "and people were calling for Bob's head more than ever before".

"I think Bob concluded that it was not going to get any better and the right thing to do was to resign."

Randall concluded the interview by asking if Barclays was either "incompetent or immoral".

Unsurprisingly, Agius chose not to pick any of those options, reiterating instead that the bank was going to institute a review of its business practice and culture, aided by a "leading figure" yet to be identified.

Live blog: substitution

7.00pm: Good evening. This is Ben Quinn taking over the blog for the evening.

We start off with some political developments, tweeted by Patrick Wintour, from parliament:

6.40pm: Here's a summary of the main events on a dramatic day.

Bob Diamond has quit Barclays as the Libor rate fixing scandal escalated to new heights. The news broke at 7.30am this morning, when Barclays announced that its chief executive was leaving with immediate effect. Diamond blamed the 'external pressure' that has build up on Barclays in recent days -- after MPs called for his resignation, and the government announced an inquiry into the affair.

MPs from across the political spectrum welcomed his departure.

Diamond's resignation was followed by that of Jerry del Missier. Here's the official statement. One of Diamond's key allies, del Missier has quit because he was the official responsible for telling Barclays staff they could submit lower Libor quotes back in 2008.

Diamond will still appear before the Treasury Committee hearing into Libor tomorrow. He could now speak more openly about relations between Barclays and the Bank of England, and the government.....

Ahead of that hearing, Barclays released an email from 2008, which appears to implicate both the Bank of England and the government in the scandal. It states that Diamond spoke to Paul Tucker of the BoE, who said that senior officials in Whitehall were concerned that Barclays was reporting excessively high daily borrowing rates in the weeks after the collapse of Lehman Brothers, and that it didn't need to always do so.

Barclays refused to comment on reports today that the Bank of England played a role in Diamond's departure. Marcus Agius, who is now temporary full-time chairman just a day after resigning, also declined to say how large a payoff Diamond will receive. There are reports that the bank wants to claw back £20m of bonuses from previous years.

I'm handing this blog over to my colleague Ben Quinn, who will watch developments for the next few hours. Many thanks for reading, and your comments and help today.

5.41pm: My colleagues on our Datablog have created a superb interactive which lets you see the Libor rates which 16 banks submitted between 2005 and 2008 - the period when Barclays staff were attempting to manipulate it.

The graphic lets you look at the daily borrowing costs submitted by each bank, against the average 'daily fix' (calculated from all their submissions).

As my colleague Simon Rogers explains:

Thomson Reuters have given us the data for each bank from 2005 to 2008 - you can explore what happened to the US dollar Libor in this interactive here.

It does show how each bank made their submission to Libor each day.

Set the chart to late 2008 and you can see the huge impact of the financial crisis - banks which had previously lined up with each other start diverging wildly as chaos gripped the markets. Barclays is not the highest - in fact RBS consistently submitted for higher rates from July to December 2008, followed by German commercial bank WestLB.

More from Simon here.

5.17pm: The Bank of England is declining to comment on the memo released by Barclays this afternoon, which implicated its deputy governor Paul Tucker in the Libor scandal.

The email can be read in full here at 4.32pm.

5.00pm: Ladbrokes has cut its odds on Gary Hoffman (former Northern Rock CEO) becoming the next chief executive of Barclays, after taking a "decent bet" on him this afternoon at its Charing Cross branch in London.

Hoffman is now priced at 10/1, from 16/1 originally. A Ladbrokes source says he is the only candidate who has seen significant interest today.

Hoffman has been running NBNK, the venture that hoped to become a new player in the UK banking sector. It's now being wound up, though, after missing out on the Lloyds bank branch sale.

4.56pm: After a day of heavy drama, Barclays shares closed down 1.35p, or 0.8%, at 168.4p. That doesn't begin to reflect today's turmoil.

Libor interactive guide

4.49pm: Over in Westminster, there is fevered speculation about the identity of the "senior figures within Whitehall" who apparently told Bob Diamond, via Paul Tucker of the Bank of England, that it should manipulate its Libor submissions (see 4.32pm for the killer email released this afternoon).

Ed Balls has been pointing out that he was Children's Minister at the time, so not involved with the financial crisis.

Another name doing the rounds is Baroness Shriti Vadera, who worked in the Cabinet office and the Business department in October 2008.

4.39pm: It appears that Bob Diamond's daughter Nell has offered public support for her father on Twitter, following his resignation this morning.

Tweeting as @nelliediamond, she said blamed the scandal on the mistakes of "a few":

A second tweet has now been deleted. It said George Osborne and Ed Milliband could "go ahead and #HMD" (an American youthful insult, standing for 'hold my....')

We're trying to get official confirmation from Barclays that the account's really hers, so do take with caution. but it appears to be genuine. There are even tweets expressing support for Chelsea football club (also her dad's team).

UPDATE: Barclays has confirmed to us that the account is genuine.

4.32pm: Barclays has dragged the Bank of England, and the last Labour government, deeper into the Libor scandal.

Its submission to the Treasury Select Committee includes an email apparently written by Bob Diamond on 29 October 2008 (when the crisis was raging), following a telephone call with Paul Tucker of the Bank of England. In the message, Diamond writes that Tucker told him that "a number of senior officials in Whitehall" had expressed concern over the Libor numbers that Barclays had been reported (the rate at which other banks would lend to it).

The email goes on to show that Diamond implied that other banks have been submitting rates that did not reflect their true cost of borrowing, and concludes by suggesting that Tucker had suggested that Barclays Libor submissions did not need to be so high.

Here is a full transcript of the message, which was sent to then chief executive John Varley, along with Jerry del Missier:

Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing. His response was "you have to pay what you have to pay". I asked if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions, his response "oh, that would be worse".

I explained again our market rate driven policy and that it had recently meant that we appeared in the top quartile and on occasion the top decile of the pricing. Equally I noted that we continued to see others in the market posting rates at levels that were not representative of where they would actually undertake business. This latter point has on occasion pushed us higher than would otherwise appear to be the case. In fact, we are not having to "pay up" for money at all.

Mr Tucker stated the levels of calls he was receiving from Whitehall were 'senior' and 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.

This is dynamite, although I must caution that the Bank of England has not had a chance to respond.

*: RED, incidentally, stands for "Robert E Diamond", and is the nickname used by Barclays staff.

4.15pm: Marcus Agius's appearance before the Treasury Select Committee, scheduled for this Thursday, has been postponed.

The TSC has just announced that the evidence session has been postponed until next week.

4.03pm: A quick summary of the Barclays media call (click down to 3.25pm onwards for the highlights). In short, it wasn't the most illuminating press briefing ever.

Marcus Agius's explanation that Jerry del Messier had been the man ultimately responsible for Barclays staff manipulating the Libor rate is significant, and chimes with other reports today.

Email sent by Barclays' Bob Diamond over Libor discussions.

However, Agius's refusal to discuss the Bank of England's involvement in Barclay's Libor submissions, or the claims that Sir Mervyn King played a role in Bob Diamond's departure, won't stop these questions being asked again, and again....

3.51pm: The Barclays conference call ends somewhat shambolically. Newsnight's Paul Mason gets the last question, and starts to challenge Marcus Agius over his refusal to discuss the Bank of England's role in Barclays manipulation of Libor rates. But mid-question, Mason is suddenly cut off (it did sound like he was on his mobile)

Agius does have a stab at answering the question, by reiterating that this issue is not for today. In other words, Bob Diamond will reveal more to the Treasury Select Committee tomorrow.

3.45pm: Simon Nixon of the Wall Street Journal asks why Barclays decided last Thursday that it was appropriate for four executives to simply hand back some of their bonuses because of the Libor scandal, but had now moved on to an attempt to "shake down" the Bank of England by implicating it.

Marcus Agius won't be drawn on the Bank of England issue, but does suggest that some junior staff will eventually face the music over the issue. Diamond and del Messier surrendered their bonuses because they were the officers in charge. As he puts it:

Anyone who has culpibility will be punished in an appropriate manner. Anyone who has responsibility will be treated differently.

3.40pm: Sky's Mark Kleinman asks Marcus Agius how Barclays stakeholders can have confidence that he is the best man to run Barclays as fulltime chairman (given he resigned yesterday morning).

Agius explains that his deep knowledge of Barclays means he is the best person to take short-term control, and the best person to oversee the recruitment of a new CEO.

He also declines to elaborate on plans to claw back Bob Diamond's bonuses, pleading for patience from the media:

We're only a few hours into this....give us a chance.

3.37pm: Next question -- will Barclays (as has been reported) attempt to claw back tens millions of pounds worth of bonuses from Bob Diamond? (Sky News has reported a figure of £20m).

Marcus Agius won't give a clear answer to this question either, saying:

It's going to be a board decision...there's nothing useful I can say on this today.

3.35pm: Next question for Barclays chairman Marcus Agius – how will he go about replacing Bob Diamond?

Agius acknowledges that it will be difficult to find someone with the necessary skills to run Barclays, and pledges that the process will be thorough. "We will not compromise on quality", he adds.

3.34pm: Why did Jerry Del Messier resign today?

Marcus Agius says that the Barclays COO chose to step down because he was the most senior person to instruct Barclays staff that Libor rates to be lowered.

3.31pm: Reuters' Steve Slater has the second question - and again asks Agius about the key question. What impact has the Bank of England had?

Again, Agius refuses to elaborate, saying that it is a matter for Bob Diamond to discuss tomorrow (at the Treasury Select committee).

What about remuneration? How much will Bob Diamond walk away with?

Agius says that it's been "a very busy day", and the issue hasn't been decided yet.

3.29pm: Jill Treanor starts the media Q&A with Barclays by asking Marcus Agius what changed between yesterday morning (when he resigned), and this morning. She also asks what involvement the Bank of England has had.

Agius explains that he "hoped to lower the temperature" by stepping down as chairman. However, this clearly hadn't worked.

By the end of the day, the two individuals felt the situation would not go away anytime soon.

Agius then declines to discuss the Bank of England question.

3.28pm: Marcus Agius: our management changes today are "important steps" in the bank moving forwards.

3.25pm: The Barclays media press conference has just begun.

Chairman Marcus Agius begins by telling the press that he had received resignation offers from both Bob Diamond and Jerry del Missier last night.

It is a measure of these two leaders that they took these decisions... putting the future of the bank ahead of their careers.

He credits both men with making a very big contribution to Barclays' growth and success in recent years, but admits that the bank has a lot of work to do to rebuild its reputation with all its stakeholders.

3.22pm: This is really important - Barclays has just published its submission to the Treasury Select Committee ahead of tomorrow's hearing with Bob Diamond.

It's online here.

It includes an explanation of how the Libor manipulation happened, and does indeed involve Paul Tucker of the Bank of England.

Here are the details:

On 29 October 2008, Bob Diamond received a call from Paul Tucker, the
Deputy Governor of the Bank of England. The substance of that call was captured by Bob Diamond via a note prepared at the time. A copy of that note is appended to this document; it was circulated to John Varley, then Barclays Chief Executive, and Jerry del Missier, then President of Barclays Capital.

Subsequent to the call, Bob Diamond relayed the contents of the conversation to Jerry del Missier. Bob Diamond did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier. However Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep LIBORs so high and he therefore passed down a direction to that effect to the submitters.

There was no allegation by the Authorities that this instruction was intended to manipulate the ultimate rate. The bank's submissions had consistently been excluded from the LIBOR calculation. Moreover the instruction became redundant in a matter of days as market conditions improved.

The FSA investigated Jerry del Missier personally in relation to these events and closed the investigation without taking any enforcement action.

3.20pm: Barclays chairman Marcus Agius is about to hold a media conference call to discuss today's news. I'm dialled in, so should be able to liveblog the highlights here. The call has actually been delayed by 10 minutes - guess there's an awful lot of journalists trying to dial in.....

3.01pm: Sky are reporting that the Barclays board plans to ask Bob Diamond to hand back "almost £20m of bonuses" paid out in prior years.

2.46pm: Here's the official statement from Barclays, confirming that chief operating officer, Jerry del Missier, has quit with immediate effect, seven hours after Bob Diamond.

Management changes

Barclays today announces the resignation of its Chief Operating Officer, Jerry del Missier with immediate effect.

Commenting, Mr del Missier said: "My 15 years at Barclays have been a time of great accomplishment, both for me personally and for the bank. I am grateful for the opportunities that were provided to me and proud of what we achieved. We built one of the premier global investment banks from scratch – something that we are all very proud of. The firm is as strong today as it ever has been and is incredibly well placed to succeed within the post financial reform competitive landscape.

"I have every confidence that the Board and Executive Management of Barclays will be successful in executing their plans, and I wish them the best of luck in doing so."

Commenting, Barclays Chairman, Marcus Agius said: "Jerry played a pivotal role in many of Barclays standout successes during the last 15 years, including his extraordinary contributions as part of the leadership team that built the investment bank. His many contributions to the firm were critical to why Barclays was able to weather the extreme market turbulence of the credit crisis as well as we did. His colleagues, clients and other stakeholders hold him in the highest regard."

2.45pm: Breaking news: Jerry del Missier, chief operating officer of Barclays, has just confirmed that he is quitting the bank.

We'd reported this morning that Del Missier was considering his position -- it appears that he's been blamed for Barclays manipulation of the Libor rate.

2.39pm: Reuters has pulled together a very decent graph showing the rise and fall in Barclays share price since Bob Diamond joined the bank (so, including the years he was building Barclays Capital up). It shows how Barclays consistently beat the sector in the boom years before the credit crunch, but has steadily underperformed since.

Barclays shares had been trading as high as 176p today, a rise of 4%, but are now up just 1.4% on the day. City analysts reckon the bank is undervalued, partly because its so hard to work out the full downside of the Libor scandal.

2.20pm: The Labour Party continues to push for a full judicial inquiry into Britain's banking sector, with Ed Balls arguing against the government's plan for a parliamentary probe.

Balls told Sky News that:

I think to be honest a Parliamentary inquiry is substantially third best and the way the government has handled this since yesterday in a totally partisan way is, to be honest, undermining trust.

We need as politicians to say look we all got this wrong, there needs to be big change and we can only do that in the open scrutiny of proper hearings with proper disclosure from the politicians and the bankers, everybody there, so the public can see it is being done properly. Not just a Parliamentary inquiry, we have had those before.

Several commentators have pointed out that Labour was in power during the years when Libor was being misreported, with some speculating that a full inquity could be very uncomfortable for the party. Yet, Balls and Ed Miliband are still pushing for a Leveson-style investigation (and could even sink the government's proposal by opposing it in a vote in the House of Lords later today).

Why? Patrick Wintour, our political editor, argues that the wider the inquiry, the less likely it will simply pin the blame on the last government. He writes here:

Tuesday's Daily Mail has a good but politically inspired leak of a document suggesting Lady Vadera, a former Labour Treasury minister close to Gordon Brown, wanted to keep the Libor rate down at the height of the banking crisis.

Who benefits from this leak? The current occupants of the Treasury. The truth may be more subtle, but that is not how Labour views the leak.

Osborne is a brilliant political animal but sometimes he resembles the Pompidou Centre in Paris: all the normally concealed inner architecture is on display to the observer.

His demeanour makes it appear as if he sees a parliamentary inquiry as a one-dimensional attempt to blame Balls for the banking crisis.

Balls, of course, was City minister in the run-up to the crisis. His position is that he may well have been too soft on the sector, but the Tories would have been even more accomodating....

1.49pm: The ripples of the Libor scandal have already touched the US presidential election. It emerged overnight that Bob Diamond has pulled out of hosting a fund-raising event for Republican candidate Mitt Romney.

Romney spokeswoman Andrea Sau told the FT that:

Mr Diamond decided to step aside as a co-host for the upcoming London reception to focus all his attention on Barclays. We respect his decision.

Now he's resigned, though, Bob could always turn his attention back to supporting Mr Romney...

1.46pm: Here's a video round-up of politicians welcoming Bob Diamond's resignation.

Conservative George Osborne, Liberal Democrats Danny Alexander and Lord Oakeshott, and Labour's John Mann all believe that the Barclays CEO was right to quit. A rare issue that unites parliament.

1.26pm: Diamond's resignation, and the subsequent revelations over Mervyn King's involvement, have certainly turned up the heat on the Bank of England.

Ismail Ertürk, senior lecturer in banking at Manchester Business School, comments:

Following the FSA report, the BoE must now respond authoritatively to allegations that it encouraged banks to post low Libor rates.

Since the financial crisis the BoE has acquired huge powers through quantitative easing and liquidity provision schemes and there is no proper democratic control of such powers.

The Bank of England has a long reputation for resisting outside scrutiny and criticism (one official famously told JM Keynes that criticism of its actions was akin to questioning a lady's virtue). But there is concern in Westminster that we've never had a proper inquiry into the Bank's role.

Last November, Andrew Tyrie (head of the Treasury Committee who will question Diamond), said BoE governance was "too weak".

1.18pm: Is the famous apathy among bank customers about dumping their accounts beginning to crack amid the revelations over Libor, as well as service meltdown at RBS/NatWest?

Patrick Collinson, Guardian Money editor, reports:

Nationwide building society this morning reported it had seen an 85% week-on-week leap in the number of new customers opening accounts online.

At the end of last week Co-operative Bank said it had seen a 25% increase in on-line applications week on week, while new entrant Metro Bank said today that personal account openings are up 10% and business account openings up 50%. John Crossley, Nationwide's head of current accounts, said: "Customers are clearly unhappy with recent events and are opting to vote with their feet. Nationwide is seeing a sharp increase in the number of customers switching their account to the Society."

Barclays isn't the only bank to have angered its customers in recent days, of course. The Royal Bank of Scotland IT debacle continues, with reports this morning that some RBS customers have been billed twice for their monthly mortgage payment:

1.12pm: Here are a few more interesting reader comments (and there are LOTS more in the comments section below).


Up until 5 years ago, I had been a customer of Barclays for almost 30 years. Lethargy not loyalty kept me with them all that time. However, I never felt at any time that they had my interests at heart and I developed the view that they always tried to cut corners to improve the bottom line. Outsourcing customer contact was a disaster. Anyway, a minor final straw made me change to the Cooperative Bank. I couldn't believe the difference - this was a bank that had ethical principles at its heart and was friendly and professional at the same time. My point is - don't condemn all banks, but vote with your feet away from the banking bad apples.


I have been a customer of Barclays Bank since 1965 having become a customer as a student.

I have always found their service to be of an exemplary standard, at least as far as the retail side is concerned.

Bob Diamond founded the investment banking division and I would like to see a full investigation into the dealings of the bank before I make a change. Is trading between banks outside of the Libor rate a fraud? I don't think so. I await an investigation by the Serious Fraud Squad before condemning Barclays out-of-hand.

This issue has been circulating for 4-5 years in the City of London and was also known about on Wall Street. Why has it just come to prominence so late now that the FSA has fined the bank?

What surprises me is how so many are prepared to make a judgement before all the facts, evidence and even the extent has been considered. In may ways this issue is showing up the Regulator and the government ministers who had responsibility for financial services over this whole period.

12.51pm: Here are the best quotes on the Libor/Barclays scandal from the Financial Service Authorities Annual Meeting today (via my colleague Juliette Garside, who is there):

Adair Turner, on Bob Diamond's resignation:

I think it was in the process of becoming inevitable given the [public] comment and the challenges that they face in changing the culture of the organisation.

On the issue of whether the FSA was involved:

There were major challenges for Barclays in making sure they could convince people there had been fundamental cultural change and we simply communicated to the board that these were the issues they needed to think about it was for them to agree whether they could achieve that degree of change under the current leadership.

Andrew Bailey, the head of the FSA Prudential Business Unit, was asked whether it would have conducted a 'fit and proper test' on Diamond had he
stayed. He replied:

The board had to decide who the best person was to lead cultural change. If the answer had come back that 'it's Bob Diamond', which it could have done, then yes we would have had to have taken a view on that.

On the issue of criminal prosecutions, Bailey said:

As the law has developed, the process of submitting Libor quotes is not a regulated activity in a way that could enable us to bring a criminal case.
Clearly there is a set of issues here about whether the existing rules are appropriate.

12.35pm: It now appears that Sir Mervyn King, governor of the Bank of England, did indeed play a part in Bob Diamond's exit (although the precise timings and details remain vague).

Robert Peston's latest scoopette is that "The message that the Bank of England governor wanted Bob Diamond to go was delivered personally to Barclays' chairman Marcus Agius in a telephone conversation between the two of them yesterday."

My colleague Jill Treanor has the latest details:

Peston seems to be on to be something with this idea there was some sort of meeting between Sir Mervyn King, governor of the Bank of England, and Marcus Agius, the chairman (or not, at the time), of Barclays yesterday although it is not clear if this was before after Diamond went. I'm assured though the decision to go was Diamond's. Lord Turner, the boss of the FSA, currently holding a press conference after the regulator's public meeting, is also saying that it is a matter for the board. And in the midst of this, Barclays won't say anything other than its statement this morning.

Also Jerry Del Missier's resignation is coming (we first reported at 9.58am that Barclays' COO was considering his position). Jill explains:

It is important to remember he was a key lieutenant of Diamond's at Barclays Capital during the period when the attempts to manipulate Libor took place. It is looks as if Del Missier is the person who is carrying the can for "miscommunication" of the controversial conversation between Diamond
and Paul Tucker of the Bank of England that is likely to be aired at
tomorrow's select committee meeting.

12.09pm: Here's another potential candidate to replace Bob Diamond -- David Roberts, the current deputy chairman of Lloyds Banking Group.

FT Alphaville reckon he's the perfect choice, because:

He spent roughly his whole career at Barclays, joining in 1983 and working his way up to be first chief executive of Personal Financial Services at the bank and then head of Business Banking. He lost out to Bob Diamond in the race to be group ceo when the previous incumbent, John Varley, opted for early retirement.

Bank of England governor Mervyn King Bank of England governor Mervyn King Photograph: Jonathan Brady/EPA

Since 2006 he's spent a couple of years during The Crunch trying to sort out Austrian retail bank BAWAG PSK and is currently taking things relatively easily, serving as Sir Win Bischoff's deputy at Lloyds.

He's 50. He's smart and professional and knows Barc backwards. And he's not an investment banker.

Marcus Agius could save his bank a lot of time and head hunting fees here*.

* - just a bottle of champagne to Paul Murphy, 1 Southwark Bridge London SE1 9HL....

11.58am: Speaking at the Financial Services Authority's annual meeting today, Lord Adair Turner (who chairs the FSA) said he "respects and understands" Bob Diamond's resignation, and that it was a decision between Diamond and the board.

And with delicious timing, Robert Peston tweets that Turner, and Sir Mervyn King, had helped to bundle Diamond out of office:

If the Governor of the Bank of England really helped to force out the boss of Barclays, this crisis just entered a whole new level. What is Diamond going to tell MPs tomorrow?.....

11.49am: Here are the latest odds from Ladbrokes on potential replacements for Bob Diamond. They make Antony Jenkins, the current chief executive of Barclays retail and business banking, the favourite.

Antony Jenkins 2/1
Bill Winters 5/2
Naguib Kheraj 4/1
Christopher Lucas 6/1
Rich Ricci 6/1
Jerry del Missier 16/1 [unless he resigns first...]
Gordon Brown 100/1
Harry Redknapp 1000/1

And here are their odds for what Bob Diamond will do next:

Work for another bank 1/3
Announce retirement 4/1
Work for a listed company (non financial) 5/1
Chair a listed company (non financial) 6/1
Work for the FSA or other regulatory body 14/1

[Ron: No suggestion that he may go to goal?].

Found at:


A new nightmare on Wall Street? U.S. banks face criminal probe into global interest rate-fixing scheme as Barclays blows the whistle on America's financial giants. See:

Ed Miliband demands CRIMINAL probe into Barclays interest rate rigging scandal as £3.2bn is wiped off bank in share plunge. See:

Constitutional Court Desecrates Our Rights And Undermines The Will Of The People. See:

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