After a devastating blow to Barclays PLC (NYSE:BCS) (LON:BARC) reputation due to interest rate-fixing scandal, the bank’s chairman Markus Agius resigned today. Chief executive Bob Diamond, too, is under immense pressure to quit.
Barclays admitted that it has attempted to manipulate the setting of London Interbank Offered Rate (Libor), which is the benchmark to set prices of derivatives and other financial products worth $350 trillion. The documents released by US authorities could drag Bank of England as well in the case. Th details point to a conversation between Bob Diamond, then head of Barclays Capital, and Paul Tucker, deputy governor of Bank of England.
The Financial Services Authority says Barclays “mistakenly” believed that BoE has granted it permission to lower the rates. Last week, Barclays was fined $453 million by the US and British authorities for submitting inaccurate Libor rates.
“As chairman, I am the ultimate guardian of the bank’s reputation. Last week’s events – evidencing as they do unacceptable standards of behavior 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 his last statement as the chairman of Britain’s third largest bank.
Calling the scandal “extremely serious,” British Prime Minister David Cameron said the company management has “some big questions to answer.” The smaller shareholders are demanding Bob Diamond to take responsibility. However, the large investors including Fidelity Investments, Standard Life Investments and Scottish Window Investment Partnership have remained silent over the future of Bob Diamond.
Analysts are expecting some more big names. The European, American and Japanese authorities are investigating many other banks including RBS, HSBC, Citigroup and UBS. “I wish I could say this was an isolated case,” said Tracey McDermott, acting director of Britain’s Financial Services Authority, referring to Barclays. “You will hear more on this in due course,”