Diamond drags Bank and government into rate-rigging row

July 15th, 2012

Bob Diamond has dragged senior Bank of England and government figures into the rate-rigging row ahead of an appearance before MPs.

Questions have arisen about whether the Bank’s deputy governor Paul Tucker encouraged improper behaviour after a record of a phone call was released.

Tucker is alleged to have told Diamond that “senior Whitehall figures” had suggested to him that Barclays should not be showing such high interbank lending rates.

Diamond brought a decorated 16-year career with Barclays to a close on Tuesday when he announced his resignation as chief executive. His exit package is still being discussed and there are reports he will be asked to forego as much as £20m in unvested shares.

The American banker could well “speak more freely” to MPs when he gives evidence to the Treasury Select Committee on Wednesday afternoon.

Nell Diamond, the banker’s daughter, responded to her father’s resignation by posting a lewd comment about chancellor George Osborne and Labour leader Ed Miliband on Twitter, after the politicians welcomed his departure.

The Commons hearing is expected to focus on a conversation between Diamond and Tucker over the Libor rates during the height of the credit crunch in 2008.

A note from Diamond to his right-hand man Jerry del Missier from October 30, 2008 was released which recounted the exchange.

Diamond said Tucker had passed on concerns from “senior Whitehall figures” about why Barclays was always near the top end of Libor pricings.

Barclays’ Libor rate did not “always” need to appear as high as it had recently, he is alleged to have added.

But Diamond “did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier”, according to Barclays.

“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,” a statement from the bank said.

Barclays said there was no allegation from authorities that this instruction was intended to alter the ultimate Libor rate.

Del Missier was investigated personally by the FSA with regards to these events, but the investigation came to a close without any enforcement action taking place, the statement said.

Del Missier resigned with immediate effect on Tuesday.

Diamond drags Bank and government into rate-rigging row

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