(Financial Times) — David Cameron said there were “serious questions” for the whole of Barclays’ management after the bank was issued with a record fine for trying to change a benchmark interest rate.
Calling it a “scandal”, the prime minister said: “The regulator should use all the powers and means at their disposal to pursue this in the way they feel is appropriate.” But when Mr Cameron was asked if Bob Diamond, chief executive, should resign, he said: “Let them [the management] answer those questions first.”
Mr Cameron stressed that the manipulation of the London interbank offered rate — or Libor — happened during the previous Labour government, and under the rules that it put in place. “We are changing these rules and if there is more we can do to toughen them up, we’ll take that action,” he said.
Ed Miliband, Labour leader, is due to call for a criminal investigation, saying banks need more than “a slap on the wrist” in a speech to the Unite union on Thursday.
“When ordinary people break the law, they face charges, prosecution and punishment. The same should happen here,” he is due to say. “The public who are paying the price for bankers’ irresponsibility will expect nothing less.”
US and UK authorities have fined Barclays a record £290m for trying to manipulate Libor over five years and across three continents. Investigations into other banks are continuing.
Politicians on all sides have condemned the attempted manipulation and Mr Diamond is expected to come under increased political pressure as George Osborne, chancellor, makes a statement to the Commons about the investigation at Thursday lunchtime. Boris Johnson, the Conservative London mayor, said the practice was “very, very dodgy” and urged all banks to “come clean”.
Lord Myners, former City minister, said Mr Diamond should take responsibility for a “complete cultural failure”. He told the BBC that the behaviour of Barclays staff was the “most corrosive failure of moral behaviour” he had ever seen in a UK financial institution. Liberal Democrat Lord Oakeshott said if Mr Diamond had any shame he would resign from his position.
Mr Diamond has already said that he and three of his most senior staff would waive any bonus for this year “to reflect our collective responsibility as leaders”. But his pay packet might be scrutinised further when Vince Cable, business secretary, appears before a select committee to discuss executive pay on Thursday.
The Treasury select committee has said it plans to haul Mr Diamond, and the leadership of the Financial Services Authority, in front of them to discuss how the violations could have happened.
Andrew Tyrie, chairman of the committee, said: “Banks were clearly acting in concert. I fear it’s not going to be the end of the story, that we are going to find that other banks have been involved.”
Other members of the committee warned that it would be a mistake for the board of Barclays to think that paying the fine would be the end of the issue.
“I don’t think they should underestimate the damage this has done to their reputation and probably to banking more generally,” said Pat McFadden, a Labour MP on the committee.
A former chief executive at the bank joined in the criticism, saying Barclays should explain who knew about the practices. Martin Taylor, who led the company from 1994 to 1998, accused the bank of “systematic dishonesty”.
“The question of how high up knowledge of this goes is something only Barclays can answer. I think they should answer,” he told the BBC Radio 4’s Today programme.
“These organisations are very large, as I know myself, and the chief executive doesn’t always know everything that’s happening in the organisation,” he said. “But somebody at a senior level somewhere will certainly have known. I can’t believe Barclays haven’t identified who that is.”
Barclays shares were down 7.4% to 182p by mid-morning in London.