Barclays chairman quits in Libor shame

Barclays' chairman Marcus Agius will resign this morning as the embattled bank struggles to contain a growing crisis that began with last week’s £290m fine for abusing the Libor interest rate.

The departure of Agius comes after Barclays’ shareholders, politicians and regulators have all expressed shock at the circumstances behind last week’s settlement, which has had some calling for a public inquiry into the entire banking sector.

A source with knowledge of the situation told City A.M. that Agius had decided to quit of his own accord after receiving feedback from shareholders.

When asked whether Agius had met with investors the source said: “Shareholders have ways of getting their message across.”

Meanwhile embattled chief executive Bob Diamond faces a challenge to stay in his job as leading politicians line up to criticise his handling of the affair.

He will face a hostile reception when he appears in front of the House of Commons Treasury select committee on Wednesday and will be questioned on how much the board knew about the rigging of Barclays’ Libor submissions.

Agius, appointed as chairman in January 2007, is due to be cross-examined by the same committee on Thursday. Last night MPs on the committee said they are still hopeful he will attend, despite his resignation.

Agius will refer to the “devastating blow to Barclays’ reputation from the Libor scandal” in his resignation statement today.

He will say that, as chairman, the buck rests with him, in an attempt to take the pressure away from Diamond. He will also say: “I am truly sorry.”

Barclays declined to comment on speculation linking Sir Michael Rake, currently the bank’s senior independent director, to the chairmanship. Sources say the board will embark on a search for a full-time chair and that in the meantime Sir Michael is likely to move up to be deputy chairman.

Meanwhile the Bank of England last night reacted furiously to suggestions that one of its top officials influenced Barclays’ decision to rig the Libor interest rate.

Documents released as part of the bank’s settlement with regulators refer to an October 2008 phone call between a top executive at Barclays and an official at the central bank that caused Barclays managers to “mistakenly” believe they had been instructed to lower their Libor submissions.

Yesterday the individuals involved in the call were identified as Diamond and Paul Tucker, deputy governor at the Bank of England, leading to questions about whether Tucker was aware that the Libor rate was being abused. “It is nonsense to suggest that the Bank of England was aware of any impropriety in the setting of Libor,” a spokesman told City A.M. “If we had been aware of attempts to manipulate Libor we would have treated them very seriously.”

Although it is understood that Diamond did discuss Barclay’s Libor rate submissions with Tucker, it was as part of a routine conversation and followed press coverage of the issue.

This version of events is backed up by the US Department of Justice’s (DoJ) report into the issue.