London - Barclays Chairperson Marcus Agius quit on Monday,
saying “the buck stops with me” after an interest rate rigging scandal dealt “a
devastating blow” to the bank’s reputation.
Agius, chairperson for five-and-a-half years, is the first
major scalp from the scandal, which is likely to draw in more banks and
potentially the regulatory authorities, but his resignation did not take the
heat off Chief Executive Bob Diamond, who is under pressure to go, too.
“The buck in Barclays stops with Bob Diamond, and it is Bob
Diamond who must accept responsibility,” said John Mann, a Labour politician
who is part of a panel of lawmakers who will grill Diamond on Wednesday and
Agius on Thursday.
“He (Diamond) must resign. He’s got to go. There is no role
for people like him if banking is to be trusted again in this country and if
British banking is to restore its tarnished reputation in the world, which of
course is of great importance to our economy,” Mann said on Sky News.
Diamond and Agius have also faced calls from some
shareholders to resign after Barclays was last week fined $453m by British and
US regulators for submitting inaccurate submissions on the Libor interest rate.
“I still think it is going to be hard for Bob Diamond to
keep his job. I don’t think he has built up enough shareholder goodwill in the
past to be able to ride this one out,” said a top 25 investor in the bank, who
asked not to be named.
Barclays has admitted that some of its traders attempted to
manipulate the setting of the London interbank offered rate (Libor), which is
used worldwide as a benchmark for setting prices on about $350 trillion of
derivatives and other financial products.
“Last week’s events - evidencing as they do unacceptable
standards of behaviour within the bank - have dealt a devastating blow to
Barclays reputation ... The buck stops with me, and I must acknowledge
responsibility by standing aside,” Agius said in a statement.
When Diamond and Agius appear before the parliamentary
committee this week they are likely to be quizzed on what the Bank of England
(BoE) and other regulators knew.
Details released in documents last week could prove
embarrassing to the BoE, after sources said a key conversation held in October
2008 cited in the documents was between Diamond and BoE Deputy Governor Paul
Tucker.
Some people at Barclays mistakenly believed the bank had
been granted permission to submit artificially low Libor estimates after that
conversation, the documents released last week showed.
More than a dozen other banks are being investigated in the
long-running global probe by authorities in North America, Europe and Japan,
including Citigroup, HSBC, UBS and Royal
Bank of Scotland. Analysts and bankers expect more big fines.
Root & branch review
Barclays has admitted it submitted artificially low
estimates of its borrowing costs from late 2007 to May 2009 because it thought
rivals were doing the same and higher submissions would make it appear to be in
trouble.
Between November 2007 and October 2008 some Barclays
employees raised concerns with the British Bankers’ Association - the UK
banking lobby group that is also responsible for setting Libor - the Financial
Services Authority, the BoE and the Federal Reserve Bank of New York regarding
its concern that Libor rates were being set too low, US Department of Justice
documents said.
It said the employees did not provide “full and accurate
information” to the authorities.
Barclays said it would launch an audit of its business
practices, led by Michael Rake, its senior independent director, who will move
up to deputy chairperson.
“I am truly sorry that our customers, clients, employees and
shareholders have been let down,” Agius said.
The audit will undertake “a root and branch review of all of
the past practices that have been revealed as flawed” and assess implications
for its practices and culture. Diamond said its recommendations would be
implemented in full.
Agius said Barclays had been “well served by an excellent
executive team” under him, first led by John Varley and now by Diamond.
Agius became chairman at the start of 2007 after more than
30 years as an investment banker and then chairperson at Lazard.
He is also BBA chairperson, but that position is always drawn from one of the banks, so he is set to leave that position too.