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King: first I knew about Libor fixing was after Barclays' fine
Bank of England governor Mervyn King says Barclays 'sailed too close to the wind' and its board was in denial over the regulator's concerns.
Bank of England governor Mervyn King told MPs today that although he knew of the authorities' 'deep concerns' about Barclays' culture he only learned the bank had deliberately rigged Libor rates a couple of weeks ago.
King said he was informed of the allegations in April 2010 and knew there was an issue with the accuracy of Libor reporting during the financial crisis when the market was 'dysfunctional'. But he claimed the first he knew of any wrongdoing was when the regulator released its report two weeks ago and fined Barclays £290 million.
'Concerns about what Libor meant is a million miles away from deliberate, deceitful manipulation of submissions in order to make financial gain,' he said. 'That's my definition of fraud.'
When asked why the American authorities were 'hungrier' for the story and 'more active' in pursuing claims about possible Libor manipulation, King stressed repeatedly that unlike the Federal Reserve Bank of New York, the Bank of England is not a regulator.
He added that when it came to an investigation into the concerns about Libor, the British Banker's Association (BBA) needed a 'nudge in the right direction', but that it worked hard to make a success of the consultation.
Claiming 'I don't want to blame anybody', King pointed out that Barclays had been 'sailing too close to the wind over a wide variety of areas' for many months.
'The culture of Barclays made regulating the bank extraordinarily difficult,' he said. The Libor scandal 'was not the straw that broke the camel's back, but perhaps a bale'.
His concerns mirrored those of FSA chairman Lord Turner, who said yesterday felt that Barclays had a 'culture of gaming' and was 'trying it on'.
Turner said he felt that trust had broken down between Barclays and the regulator, adding that the letter he sent to the bank highlighting his many concerns is 'the only letter of this sort that I have sent in my time as chairman'.
When commenting on the resignation of Barclays' chairman Marcus Agius, meanwhile, King said that like Turner and the chancellor he found out via the BBC website, which he thought was 'odd'.
He added that while 'an admirable thing to do', Agius had not thought through the consequences of quitting and that as chairman was not responsible for the bank's culture – that was the chief executive's responsibility.
Agius put any prospective chairman in a difficult position, King explained. They would either have to take the job on the basis that Bob Diamond resigns – which he subsequently did – or would have to buy into the chief executive with serious worries that should the ongoing investigation bring anything else to light later down the line it would tarnish their reputation.
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- Diamond tells MPs: 'I don’t feel personal culpability'
- Del Missier: Diamond told me to order Libor fixing
- Tucker did 'absolutely not' encourage Barclays to fix its rates
- Q&A: what is Libor and what did the banks do to it?
- Diamond gives up £20 million
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