Barclays chairman Marcus Agius has resigned from his role at the bank, saying that rate fixing scandal had unveiled ‘unacceptable standards of behaviour within the bank’.
After Barclays received a record £290m fine last week for manipulating its submissions of the London Interbank Offered Rate (Libor), Agius stated that: ‘As chairman, the buck stops with me and I must acknowledge responsibility by standing aside.’
Barclays begins review of business practices
Barclays also announced that an audit of its business practices would be taking place. It will be reporting to Sir Michael Rake, senior independent director. The audit will include:
- a ‘root and branch review’ of practices
- a public report of findings
- a new mandatory code of conduct for all staff
Rake is also tipped to be Agius’s successor as Barclays chairman.
Twenty banking institutions under investigation
Regulators are also investigating 20 other institutions alongside Barclays, including HSBC and Royal Bank of Scotland (RBS), for their manipulation of Libor.
Banks use Libor to set the rate of borrowing between themselves, and these rates are used to determine pricing for products like loans and mortgages. RBS has already sacked four traders for Libor fixing.
Like Barclays, these institutions are accused of deliberately submitting low bids to Libor in order to lead people to believe the bank was borrowing at high rates. Barclays has been found guilty of this – and also of profiting from trader speculation on the Libor rate.
Barclays chief executive Bob Diamond due a grilling
It emerged on Sunday that Barclays chief executive Bob Diamond had discussed Barclays’ Libor submissions with senior staff at the Bank of England in 2008. This has strengthened calls for him to resign, despite Agius’s move taking some of the pressure off Diamond.
On 4 July, Diamond is due to appear in front of the Treasury select committee, where he will be hit with some tough questions. Treasury select committee chairman Andrew Tyrie says: ‘This is the most damaging scam I can recall. The reputation of Britain’s financial services industry has been severely tarnished.’
Diamond is expected to be asked about who made money from the rate-rigging scandal and how entrenched the behaviour was within the bank. Until now, Diamond has maintained that the scandal was low-level, saying that no one more senior than desk supervisors were aware of it. It is expected that Tyrie will challenge this.
Which? calls for a change banking culture
Which? has called on the government to take urgent action on banking reform because of the rate-fixing scandal.
Which? chief executive Peter Vicary-Smith said: ‘Banks and bankers will continue to be seen as untouchable unless individuals are held to account for their actions and the culture of banking is changed for good.’
- Watchdog Not Lapdog – find out how you can help us campaign for a strong regulator
- Corruption at the heart of banking – read Which?’s response to Barclays’ fine
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