A DEFIANT but apologetic Bob Diamond insisted last night that the bank was acting to protect itself when it manipulated the key interest rate known as Libor.
Amid calls for his resignation, Diamond in an open letter to Treasury Select Committee chief Andrew Tyrie, said the actions were made essentially to protect the interests of shareholders.
Diamond revealed that both traders and the bank itself tried to influence the rate, but with different motivations.
The traders sought to influence short one and three-month rates, “purely for their own benefit,” Diamond said, in actions he acknowledged were “wholly inappropriate”.
However, the bank was acting to protect itself following what he said was “unwarranted speculation” regarding Barclays liquidity.
“The inaccurate speculation about potential liquidity problems…created a real and material risk that the bank and its shareholders would suffer damage,” he wrote.
Nonetheless, despite the bank’s motivation being to protect itself from undue speculation, Diamond apologised for the actions saying; “I accept that the decision to lower submissions was wrong.”
The revelation from Diamond, who was not chief executive at the time of the scandal, will put pressure on him to reveal whether the decision to manipulate the key interest rate, used to set the prices of thousands of retail products as well as wholesale pricing, was taken at board level.
Diamond also pointed out that other rival banks were also under investigation for libor manipulation.
However, Diamond, who saw a staggering £3.7bn wiped off Barclays’ share price yesterday, conceded yesterday that the bank now needed “to work every day to rebuild the trust that has been damaged by these actions.”
I welcome the opportunity to provide answers....for the Treasury Committee. Our settlements yesterday represent only a part of a complex, industry-wide investigation by authorities that include the U.S. Department of Justice, Fraud Section, U.S. Department of Justice, Antitrust Division, the U.S. Commodities Futures Trading Commission and the Financial Services Authority. Barclays is the first bank to settle with those authorities. Even taking account of the abnormal market conditions at the height of the financial crisis, and that the motivation was to protect the bank, not to influence the ultimate rate, I accept that the decision to lower submissions was wrong.
We need to work every day to rebuild the trust that has been damaged by these actions and others that have come before them.