Member Article

Diamond to face MPs over Libor scandal

Former Barclays chief executive Bob Diamond is set to face grilling by MPs following the inter -bank interest rate-fixing scandal.

While his appearance was arranged prior to his resignation, he is likely to be quizzed about his knowledge of the situation. MPs are also set to ask about the Bank of England’s and former government’s role in the proceedings.

There are some concerns that that the Bank of England’s deputy governor and senior Whitehall officials were aware that rates had been manipulated.

Many are now concerned that Mr Diamond will use the hearing to attack senior political and City personnel who are believed to have put pressure on him to resign.

On Tuesday Mr Diamond’s note of conversation in 2008 with the Bank of England’s Paul Tucker was released by Barclays. He wrote that Mr Tucker had told him about concerns over “senior figures in Whitehall” over hwy Barclays has chosen ot set its Libor rates at the “top end”.

He wrote: “Mr Tucker stated the levels of calls he was receiving from Whitehall were senior and that, while he was certain that we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.”

Following htis, the Libro borrowing rates submitted by barclays fell, with the potential of understating the extent of the bank’s borrowing costs.

Libor inter-bank rates play a central role in global markers, affecting what banks businesses and individuals pay to borrow money.

The manipulation of rates may have given the impression that Barclays was in a stronger financial position than it was.

In a statement on Tuesday, Barclays said that Mr Diamond did not view the conversation with Mr Tucker as a direct instruction to change its rates submission. Following a phone call with Mr Tucker however, Mr Diamond relayed the conversation to Jerry del Missier, a senior executive in Barclays investment banking arm BarCap who resigned on Tuesday.

Barclays added: “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 [traders].”

The identity of “senior Whitehall” figures mentioned by Mr Diamond has yet to be revealed.

This was posted in Bdaily's Members' News section by Ruth Mitchell .