Bank of England deputy faces Libor quiz from MPs

PARLIAMENT will today question Paul Tucker, the deputy governor of the Bank of England, over his role in the Libor-fixing scandal that brought down top executives at Barclays bank and threatens to cause lasting damage to the reputation of the financial system.

Tucker made the unusual decision to request an appearance in front of the influential Treasury select committee at the earliest opportunity after Barclays released an account of a telephone conversation he had with Bob Diamond, then head of Barclays’ investment banking division, in October 2008.

According to Diamond’s memo, Tucker said “senior figures” in Whitehall were asking questions about Barclays’ high Libor rate submissions and may have implied that the bank should lower its estimates.

Yesterday the official who discussed Libor submissions with Tucker was widely named as cabinet secretary Sir Jeremy Heywood.

Tucker will be asked about the minutes of a November 2007 meeting he chaired where concerns were raised about incorrect Libor rates.

Before the Bank of England was dragged into the scandal Tucker was widely considered to be the favourite to take over as governor when Mervyn King steps down in the autumn. His chances of winning the top job may now depend on the quality of the evidence he presents today.

Further committee hearings are expected to be arranged before the parliamentary recess, with Barclays chairman Marcus Agius due to make an appearance tomorrow.

Meanwhile Deutsche Bank declined to comment on reports that two of its traders have been suspended after it used external auditors to examine whether staff were involved in manipulating interbank lending rates.

QUESTIONS FOR TUCKER
■ What was said during the call he had with Bob Diamond in October 2008?

■ Did he act on concerns raised about Libor at a 2007 meeting of the Bank’s Sterling Money Markets Liaison Group?

■ Was he aware that Libor-fixing was taking place at other banks?

■ Did he turn a blind eye to Libor abuse?

■ Was Sir Jeremy Heywood the Whitehall official worried by Barclays’ Libor rate?