By doing so, they may have done well for their shareholders by agreeing a less costly penalty. But that will be mean little to them as they watch events unfold in the Libor scandal.
The furore that followed Barclays’ £290m settlement with regulators resulted in both chairman Marcus Agius and chief executive Bob Diamond falling on their swords within days of the deal being announced.
Yesterday the Swiss bank UBS announced a £940m settlement for admitting virtually the same offences – a sum more than three times the Barclays figure – and in contrast there is likely to be little call for management change.
Regulators said yesterday that the fine was so much larger than Barclays’ because the misconduct was more widespread throughout the firm.
So why is a management cull unlikely?
Importantly, the key figures at UBS, headed by Sergio Ermotti, were not around at the bank during the period between 2005 and 2010, during which the interbank rates were being manipulated.
Oswald Gruebel, for example, quit the firm in September last year in the wake of the rogue trader affair that resulted in a $2.3bn loss for unauthorised trading, and many other executives have come and gone since the time of the Libor indiscretions.
So the UBS story is very much one of an institution that has cleared up its stable ahead of an official verdict on the affair. But it’s also possible to envisage a scenario in which its former management may have survived Libor had they convinced onlookers that they had put in place a better system.
In the case of Barclays, which settled its case in June of this year, the situation was different.
Diamond, who had earned himself a reputation as a swashbuckling investment banker, stepped down when it became clear that a triumvirate of establishment figures wanted him out.
Chief operating officer Jerry del Missier also resigned, the third top executive to do so after chairman Marcus Agius walked away.
What seems clear is that Diamond and del Missier’s resignations were not directly related to the Libor allegations, though of course they didn’t help. In the case of Diamond, the main regulators cleared him of any wrongdoing, making it difficult for the Bank of England and the Financial Services to force him out.
But in the end, as MPs scrutinised the machinations of the interbank lending market, it became clear there was little political capital to be gained by standing up for the embattled bank’s management. Ultimately, a combination of chancellor George Osborne, the FSA’s Lord (Adair) Turner and the Bank of England’s Sir Mervyn King, made it clear they would rather Diamond resigned.
UBS, and banks such as Standard Chartered and HSBC alongside it, have all been hit with massive fines for wrong-doing, but there has been no management clearout.
Diamond, on the other hand, smarting from a very public row over his large pay package, and his reputation for thinking big and boldly (witness the US acquisition of Lehman, following its parent’s demise) appeared to the establishment to symbolise all that the public now dislikes about bankers. In their eyes, he had to go, but it wasn’t just Libor that did it.
Allister Heath is away