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Barclays: does the buck really stop at Agius?

The resignation of Barclays' chairman Marcus Agius does not relieve the pressure on chief executive Bob Diamond.

 
Barclays: does the buck really stop at Agius?

So we got a big scalp from Barclays, but not the one some of us wanted.

The resignation of the bank's chairman Marcus Agius (pictured) is disappointing for those who thought chief executive Bob Diamond should have fallen on his sword over the Libor-fixing scandal.

Agius's departure makes it difficult for Diamond to go in the short term, leaving the bank totally leaderless. This is why Barclays (BARC.L) shares are up 7p, or more than 4%, to 170p today.

I wonder, is Barclays – a bank that has gained a reputation for pushing things as far as it can – taking another big risk? Is it gambling that shareholders will not dare to demand the head of the CEO as well as the chairman?

If so, it’s another reckless challenge that could still earn the bank a red card. Some institutional shareholders may be unwilling to see both men go at once, but the public and politicians are in the mood for a clearout, such is the outrage at the scandal that earned Barclays fines of around £290 million last week.

Sacrificing Agius may satisfy demands for someone on Barclays' board to pay the price for the damage to the bank's reputation.

But the impression that Barclays' board accepted the resignation from the wrong man will be hard to shake off.

After all, Agius wasn't even at the bank when Barclays was lying about its borrowing rate and manipulating Libor, the inter-banking lending rate. He was chairing British Airports Authority, in his first big job since leaving Lazards, the investment bank. It was, of course, Diamond who was in charge of Barclays Capital, the investment banking division at the time and the place where the offences occurred.

It is all very well for Agius to say in today's statement that as 'the ultimate guardian of the bank's reputation' the 'buck stops with him'. However, the same principle could be applied to Diamond.

Besides, Agius is a poor sacrifice compared with Diamond, who has a much higher profile as a result of his misguided attempts to argue that bankers should stop saying sorry and that he deserved his £17 million remuneration last year.

Agius was damaged goods in the eyes of some shareholders, not strong enough to stand up to Diamond. In that respect this looks like a convenient time to get rid of him, rather than a genuine attempt to reform the bank.

So, while the chairman's exit bolsters Diamond’s position, it does nothing to relieve the pressure on him.

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21 comments so far. Why not have your say?

richard stow

Jul 02, 2012 at 11:14

Guess he'll get a handsome payoff so no loss to himself, you could say a diamond handshake even ? How much do you reckon ? £m ***

Very cheap solution to Barclays woes, if it works.

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Rose G

Jul 02, 2012 at 12:33

There is no rhyme nor reason to the way the banking industry functions except for their focus on short term profits.

We have no say in how they conduct themselves, our politicians are protective of their source of funding, so there is no one to hold them responsible.

As for giving the BoE the job of regulating, they did not do very well before, so who can do the job - the banks have billions to fund their legal bills whereas those who are given the regulatory tasks do not understand the banking system, and their budget does not allow them to do the job, especially as the regulator is funded by the very people who are to be regulated.

There seems to be unwritten rules here, which we can never be party to because we are just taxpayers, who have no way of preventing governments & the bankers coming up with various schemes to defraud - just because they turn up in Armani suits, does not make them trustworthy, but that is how society judges people these days - by the quality of people's cloth rather than their integrity.

No of the fraudsters will be criminalised because all the banking institutions have done the same - just like they were too big to fail, they will be too many to be prosecuted - that should give politicians the excuse not to punish their buddies.

IMHO, they fraudsters are no better than those stupid young people who were looting the shops during the riots - unfortunately, they went to prison because they do not have access to the best barristers, while the bankers do.

Over in the USA, they have had a few scalps of these notorious highwaymen, will we see any of these cheats go to prison - not if we rely on our politicians, good on rhetoric, but utterly useless on action?

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Graham Barlow

Jul 02, 2012 at 12:37

Maybe that if the Banks were tempted to try and influence the setting of Libor it was to try and shield the Banks and their clients from the realities of the plunging and lurching of the interbank market which could have caused mayhem. It is popular to accuse Banks of downright dishonesty, but having worked in the City for 30 odd years it strikes me that there is something bigger afoot here. The skulduggery runs deep in the City when it does run. We have never had an explanation why Lloyds took over the bankcrupt HBOS without any due diligence, it was so crass that no one would believe it was true in Banking terms. No skullduggery runs deep. Prepare for more revelations. Surely the BBA who set the rates daily could have smelt a rat or spotted something that didnt ring true and sounded the alarm.. What do they do all day?

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w r bland

Jul 02, 2012 at 13:15

The standard definition of a conspiracy to defraud was provided by Lord Dilhorne in Scott v Metropolitan Police Commissioner when he said that

it is clearly the law that an agreement by two or more by dishonesty to deprive a person of something which is his or to which he is or would be entitled and an agreement by two or more by dishonesty to injure some proprietary right of his, suffices to constitute the offence of conspiracy to defraud

If a Borrower has lost some of his money by the actions of these conspirators, why is there no criminal action which can be taken

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Keith Phillips

Jul 02, 2012 at 13:49

Diamond should not be allowed to resign. He should be fired without compensation. I am sure he would then sue, but being at the head of what will turn out to be fraudulent activities, he will have difficulty in pursuing his claim for compensation. Of course, this supposes that the Board would have the stomach to punish one of their own.

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Ian Craig

Jul 02, 2012 at 14:46

Diamond told us he was worth the money. And that's a lot of money. Now, I suspect, he finds himself between a rock and a hard place: he either knew and uselessly did nothing; or didn't know what was going on and is therefore -useless. At least he didn't go buying foreigh banks at high prices, because that's a very special form of useless - although Shred's liabilities might be more quantifiable.

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Mark22

Jul 02, 2012 at 14:55

In response to w r bland, I presume somebody has to complain to the police before any criminal action can be taken. The FSA seem to have already admitted that they have no remit over LIBOR, and RBS sacked the relevant parties without pursuing criminal actions.

So I suppose somebody out here (i.e. in the real world) has to prove that they lost money and be prepared to pursue the people in RBS and Barclays (and other places when they come to light). The courts should publicly state that they will be lenient to the accused should they be willing to prove that others (higher up the chain) new what was going on and then we might see a load of senior bankers running for the hills.

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Hotrod

Jul 02, 2012 at 14:55

I read over the weekend that RBS has already sacked 10, yes "ten" of its traders for their part in the swindle. It struck me as odd because (RBS) have not yet received a fine, although the company has said it is expecting one soon.

As regards Barclays: The revelations have not suddenly appeared out of the blue. They must have known for weeks if not months that the s**t was about to hit the fan. Why haven't they sacked a similar number of traders? My guess is that Barclays' traders know too much, and won't take the push without a bit of retaliatory shoving.

Diamonds are pretty hard stones, none harder in fact, but they can be melted if enough heat is applied. It will be interesting to see if the treasury committee can raise the temperature sufficiently when Diamond Bob testifies before them.

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RL

Jul 02, 2012 at 16:31

What's the problem?

"Fraud by false representation" is defined by Section 2 of the Fraud Act 2006

A person is in breach of this section if he— .

(a)dishonestly makes a false representation, and .

(b)intends, by making the representation— .

(i)to make a gain for himself or another, or .

(ii)to cause loss to another or to expose another to a risk of loss.

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Anonymous 1 needed this 'off the record'

Jul 02, 2012 at 16:35

Simple answer to the fraud accusations, a borrower would have to prove they were impacted by them pushing the rate up, whereas most of the accusations seem to point to them pushing it down (to make Barclays look less troubled). The people likely to have lost out are depositors and those involved in complex derivatives, but quantifying liability will be more difficult.

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RL

Jul 02, 2012 at 16:41

Anonymous 1, that is not the law. See my posting.

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SAK

Jul 02, 2012 at 17:48

On one hand they say they are "special" people and as such only they can do the job and deserve the salary - then when piss poor management happens they argue they knew nothing about it - in that case they are not so special after all.

Time get a class action together against them maybe ?

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Martyn

Jul 02, 2012 at 18:28

I think people should not judge so soon as they may end up asking for the heads of all the major banks which will not serve the markets even though it may give satisfaction to some. I would not have thought that Barclays shareholders would want to get rid of Diamond although would be happy to keep him at a lower price.

If Barclays kept the rate lower then all borrowers will not have lost out (in any case a lot of personal/small business lending is linked to Base Rate not Libor). Depositors receive the interest rate offered rather then a margin over Libor so they will not have lost out.

However derivatives are another story. A review of this maze will be interesting but I guess for most transactions where someone has lost out there will be a counter-party that has gained!

I suspect that the number of companies that have lost out will be relatively small however with today's complicated treasuries, if say BP has lost out, for one, then it could be expensive to the banks. Then multiply that by 99 for the Footsie 100 (assuming they all had credit monies) and then for the Footsie 250 etc. then few becomes expensive!

Let the journalists have their day but let the investors have their day when all the facts are available.

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snoekie

Jul 02, 2012 at 18:32

Hotrod, diamonds do not melt, if enough heat is applied they burn up and return to their natural state, carbon.

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Anonymous 2 needed this 'off the record'

Jul 02, 2012 at 19:14

Having worked at Barclays I can confirm the culture is to generate profit at all costs and never mind the ethics. There are many so called professionals who are incapable of working for the benefit of clients who suffer as a result. Bad judgements, poor advice and incompetence are rife in the bank and the bosses are well aware of this. Of course Diamond should go along with serveral others who have destroyed a fine bank.

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Hotrod

Jul 02, 2012 at 19:40

@snoekie

You are half right, but nothing will burn without the presence of oxygen. My statement was made on the premise that diamonds can be made artificially by subjecting carbon to extreme heat and pressure with oxygen being excluded. The resulting chemical change produces the hard glass composition we know as diamond, and can be given a specific shape, therefore at some stage in the transformation, carbon must become liquid.

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Thoughtfull

Jul 02, 2012 at 22:09

The man and his coven have adopted the stench of unclean. Help him begone and the wounds will start to heal. But do it fast.

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Hotrod

Jul 03, 2012 at 09:58

Diamond Bob has cut and run. I've just read it on the LSE website.

But the extraordinary thing is that Marcus Agius is staying as full time Chairman!

It looks like they have been trapped in a revolving door.

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Colin Edy

Jul 03, 2012 at 11:01

Unfortunately, the people shouting the loudest, our holier than thou MP's, are some of the biggest crooks in the country. Having seen Jacqui Smith and Tessa Jowell recently pontificating on the banks, Barclays in particular, makes me want to vomit. These MP's share the same culture as bankers but whereas the bankers have omitted it our beloved MP's still believe they have done no wrong. One MP, of no importance, spent a few weeks in prison, but all those of any importance managed to escape punishment and still believe they did no wrong in cheating the general public of millions over the years. He who is without sin let him cast the first stone as the good book says, but there is no one involved in politics, with the possible exception of the " beast of Bolsover" who meets this criteria.

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Graham Barlow

Jul 03, 2012 at 11:54

It is now becoming clear that this scandal runs far deeper thanwe currently know. The position of HBOS prior to the Lloyds takeover stinks to high heaven. Even Diamond questioned the Libor submissions from other British Banks which prima facie appeared lower than Barclays in 2008. Any CEO of a Bank would ask the question ."What the Hell is going on?" Clearly the BBA, The discredited FSA, and even the B of E have major questions to address. Bearing in mind the B of E had £50 bil loans into HBOS at the time they must have been aware of HBOS's Libor rates at the time of the takeover. If Diamond was asking the questions then why didnt he get unequivocal guidance? Were the horrors of the LIBOR market so great that it was tacitly rigged to save Brown's Government from another ERM fiasco?

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Thoughtfull

Jul 03, 2012 at 22:44

It appears a great pity that Mr Brown (ONO as keep your head beneath the parapet but still draw your salary) can not be called to the same account as Mr. Diamond. The one (or two) that was there first and changed the rules to allow such goings on to slip more easilly beneath the radar can surely have some degree of complicity. Why are we not demanding that he also falls on his sword? In his case, he brought dishonour onto the British Parliament: more significant than a bank?

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