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Four! Questions Bob 'Boycott' Diamond didn't answer
The Treasury Select Committee (TSC) did a surprisingly patchy job bowling questions at former Barclays boss Bob Diamond.
The Treasury Select Committee (TSC) did a surprisingly patchy job interrogating Bob Diamond.
The former chief executive of Barclays calmly batted away most questions on Wednesday, prompting John Thurso MP (pictured) to compare him to Geoff Boycott, the famously tough-to-beat test cricketer. ‘You’ve been at the crease for two-and-a-half hours and we’re not much further forward,’ joked the Lib Dem representative for Caithness, Sutherland and Easter Ross.
It was frustrating to watch. Perhaps committee chairman Andrew Tyrie and his colleagues are playing a long game, hoping to prise more information from future guests. These should include Bank of England deputy Paul Tucker, who has actually asked to be invited to speak to the TSC, so keen is he to set the record straight over a crucial phone call he had with Diamond at the height of the financial crisis in 2008. The events and actions around this key conversation cropped up repeatedly.
Here then are the questions MPs let slip away without getting a proper answer.
What kind of a firm was Bob Diamond running?
Several MPs expressed amazement at Diamond’s assertion that he didn’t hear about Barclays ‘low-balling’, or submitting deliberately low rates of interest, to the Libor panel until this month, shortly before UK and US regulators published their report after a three-year inquiry and imposed £290 million of fines on the British bank.
For an explanation what Libor is and how it is calculated please read this guide.
The ability for banks to under report their true borrowing costs to the Libor panel – and thus escape scrutiny of any financial stress they were experiencing – was raised by Diamond in his conversation with Tucker on 29 October, 2008.
Tucker had called Diamond to tell him that senior Whitehall officials were concerned at the high rates of interest that Barclays was putting into the Libor setting process. Diamond complained that Barclays was attracting attention simply because it was being honest about the rate at which it was borrowing from other banks, while many banks were not.
At the time Diamond was trying to complete a £6.7 billion fund raising from Middle East investors and was desperate that officials didn’t get the wrong idea and demand to nationalise the bank, like had just happened to RBS.
Unusually, Diamond took notes of the conversation and sent them to John Varley, then Barclays chief executive. His note is important because it indicates that Tucker, while expressing disapproval of the practice, hinted that Barclays might do the same.
Following the phone call Diamond spoke to the bank’s chief operating officer Jerry del Missier (pictured) who apparently misunderstood what his boss was telling him as an instruction from the Bank of England to submit lower rates to the Libor panel. He went on to tell the people responsible for submitting rates to Libor to do this.
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- Barclays fined £290m for fixing bank lending rates
- Barclays names del Missier as most senior rate-rigger
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