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Diamond tells MPs: 'I don’t feel personal culpability'
MARKET BLOG: Rate-rigging traders' emails made me 'physically ill', Barclays' former CEO Bob Diamond tells MPs during inquiry.
Highlights of Bob Diamond's appearance at the Treasury Select Committee:
- Traders’ emails made me feel ‘physically ill’, Diamond says
- Says he only found out about rate-rigging ‘this month’
- ‘I don’t feel personal culpability’… but ‘responsibility’
- Swipe at the regulators: it 'should have been dealt with'
- Says some individuals face criminal investigations
- Diamond can't remember Barclays' three founding Quaker principles
- Rate-rigging was 'reprehensible', Diamond repeatedly says
- Feared government would nationalise Barclays due to high Libor submissions
- Meanwhile, FTSE finishes flat and US markets rise
17.12: Alarm bells momentarily ring as Diamond sums up by saying ‘if Barclays has another situation going forward we’ll still act the same way’, but he then adds that this means Barclays ‘will act first’, not that he is anticipating another scandal.
17.04: ‘You keep coming back to Barclays!’ Diamond tells MPs.
Stewart Hosie, Scottish National Party MP, just summed up this approach well, accusing Diamond of complaining about other banks' low-balling, but apparently not seeing that its own staff were doing it too.
The questioning has now been going on for nearly three hours.
16.58: Meanwhile, in a universe running parallel to Bob Diamond’s – to borrow a phrase from MP Andrea Leadsom at the hearing this afternoon – the FTSE 100 has ended flat at 5,684.
The euro has taken a knock, down 0.6% to 1.2522 against the dollar.
US markets have managed to move higher, with the Dow up 0.5% to 12,943.
Investors are waiting to see whether they get monetary stimulus from the European Central Bank and Bank of England tomorrow.
16.45: Of everything that Diamond has said today, and all of the questions he has dodged, MP Teresa Pearce – one of the politicians quizzing the former Barclays CEO – seems to be most peeved by his use of her first name.
'Really annoying that Mr Diamond is using our first names. so rude.'
16.41: John Thurso, Liberal Democrat MP, asks Diamond about the mis-selling of hedging products to businesses.
The vast majority of cases that have gone to the financial ombudsman have been ruled in favour of Barclays, Diamond answers.
Thurso retorts that it is possible to conclude that there is quite a considerable degree of activity that is unethical.
How is that possible, he asks?
‘You’re picking some isolated cases’, Diamond says. He says he has been visiting small and medium businesses and the feedback they’re giving about Barclays is ‘very, very strong’.
16.34: Disappointment with Diamond's lack of answers is turning Twitter users following the inquiry to comedy.
The Bugle, a satirical feed by John Oliver and Andy Zaltzman, tweets the following series of ‘breaking news’ posts:
BREAKING: Bob Diamond explains why so much escaped his notice at Barclays. 'There was always a wasp in my office. It was impossible to concentrate.'
BREAKING: Bob Diamond denies Barclays invited Beelzebub to become a board member in 2008. 'I don't recall,' he claims.
BREAKING: Bob Diamond denies Barclays Bank is scared of garlic, sunlight and crosses. 'At least, no more so than other banks,' he says.
16.27: Diamond is asked by John Mann, Labour MP, if he remembers the three founding Quaker principles of Barclays.
He is reminded that they are ‘Honesty, integrity and plain dealing.’
Diamond then claims ‘with regards to honesty, integrity and plain dealing, that is how I have behaved in my entire career’.16.18: The rate-rigging scandal not an isolated incident, says Pat McFadden, Labour MP, as he reels off other bank mis-selling incidences such as PPI, hedging products for small businesses etc.
Diamond reiterates that the rate-rigging investigation relates to a scandal that took place years ago.
16.10: Teresa Pearce, Labour MP, is asking some strong questions about Diamond’s level of responsibility.
She gets this out of Diamond: ‘I was responsible for Barclays capital at the time. But that’s different from personal culpability for these actions and I don’t feel personal culpability. What I do feel is a strong sense of responsibility.‘
He then waffles on about how proud he is of Barclays.
16.00: Diamond takes a swipe at the regulators.
Mark Garnier, conservative MP, asks Diamond whether regulators could have done more. Tyrie asks whether regulators were asleep at the wheel.
‘There was an issue out there and it should have been dealt with‘, Diamond answers.
15.55: Disenchantment with Diamond's answers on Twitter.
Channel 4's Jon Snow says:
'MPs simply pursuing their own agendas with Diamond..no pressure on him no coherence in questioning..no team work on the Select Committee.'
Market commentator Michael Hewson of CMC Markets:
'I'm bored now.'
Wall Street Journal columnist Simon Nixon:
'Basically these MPs seem to be reading prepared questions. Where are the revealing supplementaries?'
Paul Mason of Newsnight:
'This guy has successfully dodged journalists for week and is not being forensically examined.'
15.45: MP Andy Love wants to know whether Diamond will hand back more pay rewards.
Love says: ‘There have been reports that the board has been pressing you to give up future share rewards. Is that accurate?’
‘I have not been an avid reader of the press’, Diamond says, side-stepping another question. Love does not pursue this line of questioning.15.35: Barclays shares haven't made any significant moves since Diamond started speaking. Up slightly since he first opened his mouth just after two o'clock, and just slightly higher on the day at 167p.
Back to the inquiry: Leadsom asks Diamond: have you examined whether Barclays traders rigged any other rates? 'That would be a regular feature of our audits', Diamond says, after some prevarication.
15.22: MP Andrea Leadsom, a former head of corporate compliance at Invesco, is pushing the criminality line hard. She says ‘you seem to be inhabiting a parallel universe… You talk about reprehensible behaviour – its actually criminality.’
Diamond wants to know what the question is...
'Do you live in a parallel universe?' Leadsom retorts.
Diamond’s response? Turns to that reprehensible word again. But notes that it was only 14 traders, among thousands.
Won't give his support to criminal investigations but notes that some individuals face criminal investigations. And says 'we're certainly not going to get in the way of it'.15.18: MPs astounded at Diamond’s apparent lack of knowledge about everything that was going on. ‘What kind of firm were you running?’ he is asked in a repetitive line of questioning.
Diamond just repeatedly says the actions of traders were ‘reprehensible’.
‘It doesn’t wash’ says MP George Mudie.
An exasperated Mudie continues: 'This is what the ordinary person out there will think... your deputy misunderstands apparently what you said and instructs his people to get the rate down. Why didn't they turn around and say Jerry, we're been doing it for 18 months!'
15.11: Asked if he is under any civil or criminal investigation from US or UK regulators, Diamond says he doesn’t know.
He is then asked: should banking be subject to a more punitive regime such that wrong-doers acting recklessly or deliberately to mislead markets face criminal charges?
Diamond’s answer seems to be ‘no’, but he’s side-stepping this stuff.
‘They should be dealt with harshly… they should go through a process.
‘When I read the emails from those traders I got physically ill. If you’re asking me should those actions be dealt with? Absolutely.’
15.07: Pressed on when he first found out about low-balling of Libor rates, Diamond finally says 'this month'.
'The findings of the investigation came to me four or five days before they were published.'15.04: Tyrie doing the questioning again:
‘Why were you unaware [of Libor rigging]?'
Diamond: ‘It was not brought up to that level.’
Tyrie: 'What was wrong with Barclays that something so important was not reported up?'
Diamond: 'There was a feeling that it had been resolved.'
Diamond then says he was first made aware of rate-rigging during the FSA investigation.15.00: How did Diamond’s right-hand man del Missier (the top exec directly implicated) misconstrue the purpose of Diamond’s phone call with Tucker? Diamond not said anything new here: Miscommunication from the ‘bank of England down’.
14.57: On his note implicating Tucker: ‘My reaction to that note was appreciation in Paul Tucker in doing his job.’
Diamond’s first reaction was to say to Tucker ‘you have to make sure they are funding fine. It’s not wonderfully, it’s adequately’.
‘I didn’t believe’ they were trying to get me to fiddle Barclays’ Libor submission
‘It’s not the first conversation I’ve had with Paul about relative levels of Libor.‘
I said to Paul: ‘did you explain to minister the real story that other banks are posting rates below ours but are not borrowing at those levels'.
14.48: Diamond is emphasising Barclays' strengths relative to other banks in spite of high funding rates it suffered from.
'Day to day funding of the bank, access to money markets, access to funds, I would have categorised it… as right at the very top in terms of access to funding.'
I think the Bank of England and the Fed would say Barclays was in a very good position, he says.
He refuses to answer which government officials Paul Tucker was referring to in his phone call that Diamond described in his note yesterday.'I would only be speculating... My recollection is Paul didn’t mention who he was referring to.'
14.44: Diamond was worried that the government would nationalise Barclays because the bank's Libor submissions were too high, he says.
14.37: Diamond is managing a few grins and wise cracks. Also managing to talk over Andrew Tyrie, the MP asking the first questions.
'You were at Barclays then too,' he jokes at one of his political inquisitors.
14.33: What did 'Whitehall' mean in Diamond's note about Paul Tucker published yesterday? Diamond answers, 'in my mind they are officials in the government'
Diamond only made a 'handful' of notes from conversations with regulators, he says, like the one published yesterday implicating Whitehall and Paul Tucker.
14.25: Asked about the regulators’ doubts over Barclays’ leadership – with an FSA visit in February – Diamond claimed the ‘focus and tone at the top was something they were particularly happy with’.
Though, the FSA ‘felt there were some culture issues’.
We took some of this as ‘this is the annual review at the FSA… it’s always going to have some things they're going to be critical of and we’re going to do better,’ Diamond says.
14.20: ‘I love Barclays’, Bob Diamond begins his testimony to MPs, and repeats it several times.
He calls the traders responsible for manipulating inter-bank rates ‘reprehensible’.
But they are ‘not representative of the firm that I love so much’.
Says no knowledge of whether chairman Marcus Agius had conversations with regulators that led to his resignation as CEO.
14.01: MPs' grilling of Barclays' recently-resigned CEO Bob Diamond is about to kick off.
Not surprisingly the Bank of England's Paul Tucker, yesterday implicated in the fixing of rates, has asked for his chance to speak.
The Bank of England just published a statement:
'Paul Tucker has made a request to attend a hearing with the Treasury Select Committee as soon as possible following the publication of settlement agreements by Barclays with the Financial Services Authority, the US Commodity Futures Trading Commission and The United States Department of Justice in relation to the attempted manipulation of LIBOR and EURIBOR.
'Mr Tucker is keen to give evidence to the Committee in order to clarify the position with regard to the events involving the Bank of England, including the telephone conversation with Bob Diamond on 29 October 2008.''
Tullow expects record revenues for the first half of 2012
12.01: The promise of record revenues has not helped Tullow Oil (TLW.L)'s share price today, with shares near the bottom of the FTSE 100 as investors take profits.
The company said in a trading statement that it expected record revenues for the first half of 2012, but would face a charge of $440 million for writing-off exploration projects.
In response to the update, analysts at Canaccord Genuity said they still had concerns about production for 2012. But ‘balancing this, Tullow is entering an exciting exploration period in Kenya, French Guiana and Guyana, which given its track record has the potential to add resources’. As a result Canaccord has a ‘hold’ rating for the company.
Bernstein though cut Tullow’s price target to 2140p from 2200p, while keeping an ‘outperform’ rating.
The shares have had a strong run this year, but today are down 31p to 1,500p.
- Chris Marshall
City investor wants 'I'm not a banker' badge
11.29: The new chief executive of Barclays must be an outsider and not another investment banker – or public confidence will not be regained, Threadneedle’s head investment honcho said today.
Speaking at a meeting for journalists this morning, chief investment officer Mark Burgess said he thought it was ‘appropriate’ that Diamond had stepped down.
We need ‘someone with no legacy issues, who isn’t tainted by any of what has happened’ said Burgess. His comments come a day after Diamond resigned and as chairman Marcus Agius starts the search for a successor.
Asked about the potential damage to the reputation of the City form the rate-rigging scandal, Burgess said he would wear a badge saying ‘I’m not a banker’.
‘It shows brand reputation can go in a heartbeat’, he added, while emphasizing how important healthy banks were for a prosperous economy.
Burgess said Threadneedle had been underweight banks – which 'need a lot more capital' – for about five years.
- Chris Marshall
Weak services sector adds to QE argument
11.01: A mood of giddy excitement pervades the Citywire newsroom ahead of the Treasury grilling of recently resigned Barclays chief executive Bob Diamond. What more will he reveal about the Bank of England's involvement in the deepening rate-rigging scandal?
But in the meantime, we must deal with more gloomy news on the British economy. Disappointingly weak services data – partly a result of the Diamond Jubilee celebrations – has added to expectations of more economic aid from the Bank of England when its monetary policy committee votes tomorrow.
The PMI services measure, from Markit & CIPS, fell two points in June to an eight month low of 51.3 (anything above 50 indicates expansion).
'One might take heart from the fact that this balance stayed above the 50 mark in a month when activity was distorted by the Diamond Jubilee celebrations,' commented RBS economists in a note. But that was a rare positive statement in an otherwise gloomy City response.
That weak data adds to poor survey results for construction and manufacturing too.
Andrew Sentance, a former member of the MPC rate-setting committee, made an interesting comment on Twitter in light of the rising oil price, which is back above $100 (brent crude futures). 'UK inflation outlook not looking so rosy now. Weakens case for more #QE from BoE,' he wrote.
The consensus remains for another £50 billion in asset purchases though.
– Chris Marshall
Investors hold out for a (monetary policy) hero
09.10: European markets are trading lower as investors hold out for further economic stimulus following central bank meetings tomorrow.
A meeting of European Central Bank (ECB) officials could see interest rates cut to stimulate the region’s economy, and further quantitative easing (QE) is expected at a meeting of the Bank of England’s Monetary Policy Committee (MPC) tomorrow.
More money printing from the bank could be on the cards following a close vote in favour of more QE in June and poor economic data.
However, higher oil prices could increase the likelihood of more QE. Former Bank of England MPC member Andrew Sentance commented on twitter last night: ‘Oil price (Brent crude) back over $100/bl. UK inflation outlook not looking so rosy now. Weakens case for more #QE from BoE.’
Germany’s DAX index shed 0.28% to 6,560, France's CAC 40 index gave up 0.5% to 3,250, and the FTSEurofirst 300 index of top European shares lost 0.32% to 1,043.
– Caelainn Barr
Banks drag FTSE lower
08.46: The FTSE 100 is off to a shaky start, down 0.3%, or 16 points, to 5,672 as banking stocks weigh on the index ahead of the appearance of former Barclays’ chief executive Bob Diamond at the Treasury Select Committee.
Diamond will be questioned about the bank’s role in Libor fixing, in what could prove to be explosive evidence if Barclay’s statement yesterday implicating deputy governor of the Bank of England, Paul Tucker, in the scandal is anything to go by.
Banks are all dragging the FTSE 100 lower with Standard Chartered Bank (STAN.L) leading the way on down 2.5%, or 35p, to £14.12; HSBC (HSBA.L) slipped 6.3p, or 1.1%, to 564p; Barclays (BARC.L) gave up 0.5p, or 0.3%, to 166.5p; Royal Bank of Scotland (RBS.L) shed 1.9p, or 0.88%, to 214.7p; and Lloyds Banking Group (LLOY.L) lost 0.2p, or 0.6%, to 31.6p.
Oil prices have narrowed 0.6%, though brent crude remains at $100.06 a barrel.
– Caelainn Barr
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