++ Barclays chief executive Bob Diamond quits

Yesterday Nick Clegg called for more resignations at Barclays in the wake of the rate-rigging scandal. Well, he’s just got his wish in part fulfilled, with the news that chief executive Bob Diamond is falling on his sword (or was he pushed?). Here’s how the BBC reports it:

Barclays chief executive Bob Diamond has resigned with immediate effect.

The move follows the resignation of chairman Marcus Agius and comes less than a week after the bank was fined a record amount for trying to manipulate inter-bank lending rates.

Mr Diamond said he was stepping down because the external pressure on Barclays risked “damaging the franchise”.

More surprisingly, the bank’s chairman Marcus Agius, who quit yesterday in an apparent attempt to keep Mr Diamond in post, has now been re-instated according to the bank’s news release:

Barclays today announces the resignation of Bob Diamond as Chief Executive and a Director of Barclays with immediate effect. Marcus Agius will become full-time Chairman and will lead the search for a new Chief Executive. Marcus will chair the Barclays Executive Committee pending the appointment of a new Chief Executive and he will be supported in discharging these responsibilities by Sir Michael Rake, Deputy Chairman. The search for a new Chief Executive will commence immediately and will consider both internal and external candidates. The businesses will continue to be managed by the existing leadership teams.

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28 Comments

  • This solves little. Diamond is an avatar of a banking culture that emphasises avarice over common decency and sense; he is not the wellspring of this malign environment. Unless there is a thorough enquiry followed up by meaningful reform, the problems in Barclays and elsewhere will continue.

  • Nonconformistradical 3rd Jul '12 - 9:02am

    “Unless there is a thorough enquiry followed up by meaningful reform, the problems in Barclays and elsewhere will continue”

    However, a long public enquiry as labour want might just kick the whole issue into the long grass. Could that be labour’s real motive in demanding it?

  • Nonconformistradical3rd Jul ’12 – 9:02am………………However, a long public enquiry as labour want might just kick the whole issue into the long grass. Could that be labour’s real motive in demanding it?…………..

    The Levenson enquiry into ‘dubious’ media practices is effective precisely because it’s not run by politicians whose primary purpose would be to cover their/party arses.
    When this scandal broke both Cameron and Osborne used their first speeches on the matter to blame Labour so one can see why Labour believe that, instead of an investigation into banking, it will be yet another ‘Yah-Boo’ exercise.

  • Paul Murray 3rd Jul '12 - 9:26am

    Glaxo Smith Kline has just been fined $3 BILLION (that’s BILLION) in the USA following a criminal investigation into their efforts to encourage doctors to prescribe an anti-depressant for other non-approved uses such as weight loss and as an anti-smoking aid.

    GSK broke the rules and are paying a huge price in the USA – both financially and in reputation – where there is relatively tough legislation against off-label marketing.

    Given what we now know about the impact of Barclay’s LIBOR fixing it speaks volumes that the FSA’s only available response was to impose a trivial fine of a few million pounds.

  • In this instance, I’m genuinely uninterested in the party political angle: the Tories instituted the Big Bang, Labour championed light touch regulation. Much like with News International, there is an institutional problem which is not confined to any one political party. There must be an enquiry. It must be public and open. All responsible parties must accept their share of the blame. Genuine reform should be proposed and enacted on a cross-party basis. To do anything less would be to fail the country – and I’d like to see how well that would play out with the general public.

  • Major shareholders quick to say they didn’t want him to go. It was political /media pressure that forced him out. Governance of banks still unresolved. More mutuals in financial sector are needed

  • Some major shareholders were calling for him to go yesterday.

  • Think it was the shareholders who were voicing concerns that tipped the balance for Diamond. That and the prospect of criminal prosecutions made it untenable for him, I think.

  • It would be nice for those in our party who endorsed the current economic model to acknowledge that they may have got something wrong, and we can start moving forward. It is not impossible that Tories will beat us to it – remember Ted Heath’s “unacceptable face of capitalism” (in another context). One key advantage our party has (had?) is that it did not endorse the current economic model, which has been such a powerful motivator for these scams.

  • There was an interesting interview on Channel 4 last night with a Reuters journalist Carrick Mollenkamp. He maintained, that everybody knew about the LIBOR manipulation back in 2008, and that he put his worries about this, to Angela Knight at the BBA.
    http://blogs.channel4.com/snowblog/bba-libor-vastly-bigger-scandal-knew/18075
    I find it incredulous, that no-one at the FSA, BBA or the Bank of England did not know of this LIBOR rigging.
    So, why would regulatory bodies turn a blind eye to LIBOR rigging?
    In 2007/08 at the height of the banking crisis, turning a blind eye to LIBOR rigging had the added advantage (from a regulatory perspective), of masking just how insolvent the banks were at that time.
    My personal belief is that the Bollinger trading boys making money, is just a side show. The real effect of the LIBOR rigging was to hide from public view, just how dire and insolvent the financial institutions were.

  • Paul in Twickenham 3rd Jul '12 - 1:04pm

    @John Dunn
    Yes, it was well known in 2008. In fact there was extensive discussion about it in the Wall Street Journal at the time. For example on May 30th 2008 the WSJ ran an article “Banks may have filed flawed interest data for LIBOR benchmark” which named 5 banks (notably not including Barclays) as “reporting significantly lower borrowing costs for LIBOR than what they should be”.

    The purpose of rigging LIBOR was certainly in part to hide the true cost of borrowing for the institutions, but it also served a significant function in increasing the profit that could be achieved from OTC derivatives. An obvious example would be in the interest rate swaps that have recently been getting air-time as many SMEs were told they had to buy these “protection products” which often used LIBOR as a benchmark.

    It’s worth remembering that the total notional value of all OTC products is HUNDREDS of TRILLIONS of dollars (ie a large multiple of the total GDP of the planet). Even though LIBOR fixing doesn’t affect all of them, this was (and is) big business.

  • If it was as ‘well known’ ,as many now claim, how is it that Diamond was (as he claims) completely unaware.

  • toryboysnevergrowup 3rd Jul '12 - 1:42pm

    If this is all due to Nick Clegg perhaps he could ask for a proper enquiry into banking as well!

    Rather than just the rigging of LIBOR perhaps a little attention could be paid to what happens in teh markets for commodities and distressed debt – where many of the victims of manipulation by hedge funds, financial institutions and suppliers are often those for whom the impact is rathergreater than 1 or 2 basis points on LIBOR.

  • Paul : thanks for reply. here is the article you mention.
    http://online.wsj.com/article/SB121200703762027135.html?mod=googlenews_wsj#articleTabs%3Darticle
    It seems to me, impossible for the relevant authorities, not to have known of this LIBOR fixing scandal back then in 2008.
    Not only do we need a public enquiry, it needs to broaden its investigative remit to include the FSA, the Bank of England and the BBA.
    The Tories must not be allowed to push through an internal ‘quick and dirty’ inquiry with only a narrow focus. The magnifying glass needs to be broadened.
    If ever there was a time for Lib Dem MP’s to stand and be counted, it is now.
    Also worth a read :
    http://www.bbc.co.uk/news/business-18688417

  • toryboysnevergrowup 3rd Jul '12 - 1:47pm

    And what pay off is Diamond going to be allowed to receive under the tough remneration code negotiated by Vince. One hopes it is something rather less than the £750k reported to be going to the 65 year old Charman – who appears to have taken the concept of the buck stopping here rather too literally. All those pensioners wanting to take responsibility for rather smallerfailures should form an orderly queue!

  • As a point of interest:
    Now that chairman Marcus Agius is to be reinstated at Barclays, will he be reinstated on the BBC executive board?
    http://www.guardian.co.uk/media/2012/jul/02/barclays-marcus-agius-bbc-board?newsfeed=true
    And why was he on the BBC executive board in the first place ?

  • Paul in Twickenham 3rd Jul '12 - 2:13pm

    @Jason – persumably we shall find out tomorrow.

    The inimitable Tyler Durden over on zerohedge.com has been talking about what (in his typical style) he calls LIE-bor for absolute ages. See for example this article from January 2009 where he expresses puzzlement that the “nationalized” banks (which are inherently least risky since backstopped by the government) are reporting some of the highest 3m rates for LIBOR: http://zerohedge.blogspot.co.uk/2009/01/this-makes-no-sense-libor-by-bank.html

    It is indeed puzzling that this has all come as such a shock to the great and the good. None of them read the WSJ or peruse zerohedge, apparently.

  • Paul in Twickenham3rd Jul ’12 – 2:13pm……….@Jason – persumably we shall find out tomorrow………………

    Paul, if only that were true.

    Meanwhile, back in the ‘real’ world??????? One wonders why massive salaries/bonuses are paid when, as you say, all those being paid to run things are from Barcelona (“I know nothing”)

  • Paul in Twickenham 3rd Jul '12 - 4:48pm

    A highly appropriate (20 second) clip from Casablanca suggested by someone, somewhere… http://www.youtube.com/watch?v=-Gf8NK1WAOc

  • Paul in Twickenham:
    Full marks for the youtube clip. It doesn’t get much more succinct than that.

  • Nick (not Clegg) 3rd Jul '12 - 7:59pm

    So, Diamonds are not for ever.

  • Bill le Breton 4th Jul '12 - 8:39am

    In October 2008 Barclay’s were doing all they could to prevent the HM Government becoming a shareholder. Now we know that HMG was doing all it could to prevent it becoming such an investor.

    We have known for some time that UK based commercial banks were using the depositors’ guarantee scheme to part-fund its speculations – that there was a collective failure of bank boards, Bank of England staff, the FSA, the Treasury and most of the political Establishment to blow the whistle on this dangerous situation. The UK power elite were incompetent. (Cable almost alone in being the exception).

    The Bank of England compounded this failure by supporting it with far too loose monetary policy from the dot-com bust onwards and, then, from 2006, as oil and other commodity prices rose, and deleveraging began in the property markets, the Bank failed to loosen that policy and have continued to run an inappropriately tight policy, yes, even after the exceptional use of low nominal rates and QE.

    Yet almost all the players involved in those mistakes remain in post and continue to fail the people of this country. There has never been an inquiry into events leading up to Northern Rock, Lloyds, RSB, nor into why rates remained high for 6 months after the collapse of Lehmans, nor in subsequent decisions by the monetary authorities. That is why this incompetent and self-preserving power elite remains largely in place and about to manage their succession strategy to preserve their approach into the future.

    The key to recovery is monetary policy. Yet this policy is allowed by Parliament to remain in the hands of these incompetents. And then, because these incompetents continue to fail, it is the idea of monetary policy that is discredited rather than the individuals.

    If the Treasury Select Committee manages to land a single punch on Mr Diamond today, Mr Tucker later and surely the Chair of the FSA and the GOvernor of the Bank of England in the future, I shall eat my hat.

  • Paul in Twickenham – Your 20 sec. clip from ‘Casablanca’ should be played at the start of the Treasury select committee’s hearing in front of Bob Diamond, though it wouldn’t surprise me if some of them didn’t get it like some You Tube viewers, apparently. (Thank God Therese Coffey sits on a different panel.)
    Actually, this wry look at how so many of us would behave if we had the chance should be seen by all those who constantly champion deregulation whilst at the same time taking a backhander from taxpayers when not manipulating the markets.

  • Bill le Breton makes an excellent point :
    “We have known for some time that UK based commercial banks were using the depositors’ guarantee scheme to part-fund its speculations”
    So the commercial side of a bank allows the investment side to use (some or all), of an £85,000 bank deposit (back stopped by the taxpayer), to be used at zero risk to the bank, for mortgages, loans, business loans, or as Bill says to part fund it’s speculations.
    But it is worse than that. Add the effects of fractional reserve banking and the £85,000 cash, in that bank account is now turned into something north of, £1,500,000’s worth of gambling chips. So for every £85,000 of actual money there is at least £1.4 million of pretend money out there in the ether.! In a shrinking economy, much of that £1.4 million is imaginary wealth, with nothing of any substance to back it up.
    OMG
    And that’s the part of banking that can be grasped easily! When it comes to OCD’s and Credit Default Swaps, I think I would rather tackle the concept of the Higgs Boson!

  • Marilyn Hebbron 5th Jul '12 - 7:55pm

    After hearing Danny Alexander on C4 News tonight re. the vote on the Banking Inquiry I find it extremely difficult to imagine that I will ever vote Lib Dem again.

    The whole debate was a complete party political farce with Osborne withdrawing his accusations against Ed Balls immediately after the vote. Libdems may be content to participate in this pantomime but I believe Britain deserves and desperately needs a far higher calibre of behaviour from our law-makers.

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