FSA: BARCLAYS WAS GAMING US

REGULATORS claimed last night that they felt “gamed” by Barclays as former executive Jerry del Missier told MPs that Bob Diamond had instructed him to lower the bank’s Libor rate submissions.

Appearing in front of the Treasury select committee del Missier, Barclays’ ex-chief operating officer, admitted instructing traders to reduce Libor submissions but said he would not have given the order if he did not think it had the backing of the Bank of England.

“Mr Diamond told me [deputy governor of the Bank of England] Mr Tucker had given the instruction,” he said.

“What was communicated to me by Mr Diamond was that there was political pressure on the Bank regarding Barclays’ health and that we should get our Libor rates down.”

This is in stark contrast to Diamond’s account of the same conversation. The former boss has claimed there had been no direction from the Bank of England and he had not told del Missier to alter the Libor rate.

Despite this del Missier struggled to explain to MPs why he did not double-check the instruction.

“At the time it seemed appropriate given everything that was going on...it didn’t seem a significant event.”

In a new development it was revealed that Barclays’ compliance department was informed of the October 2008 instruction to lower Libor submissions at the time but apparently took no action.

“The money market desk informed compliance of the request that had come in. There was no follow up with me or anyone in senior management,” del Missier told the committee.

At the same hearing Andrew Bailey, head of the prudential business unit at the Financial Services Authority (FSA), said Barclays had “a culture of gaming – and gaming us” that came from board level.

“Although I could not find the evidence that [Bob Diamond] had his hands on these things, you couldn’t escape the fact that the culture was coming from the top. The relationship was not antagonistic. He would come in and say ‘I hear what you’re saying’. But I could not see action.”

Yesterday minutes were released of a Barclays board meeting held in February this year and addressed by Bailey. He told directors that some regulators felt “Barclays was not all that it should be” and that the bank can be seen as “relatively aggressive”.

FSA chairman Lord Turner said Barclays was the only bank he has written to with concerns about corporate attitude, adding he told Barclays chairman Marcus Agius that Diamond would have to go on 29 June, two days after news of the Libor scandal broke.

His colleague Tracey McDermott confirmed that the FSA is investigating seven institutions over their alleged involvement in Libor-fixing, adding that not all are British.