Shares in Barclays were under heavy selling pressure on Thursday morning after the banking group was found guilty of 'market manipulation' into interbank lending rates, prompting some calls for the resignation of Chief Executive Officer Bob DIamond.
The bank is to pay a £290m fine to UK and US regulators after it was found attempting to control submissions for the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR) to benefit the bank's interest rate derivatives traders. Libor and the Euribor are benchmark reference rates that indicate the interest rate that banks charge when lending to each other.
The FSA also said Barclays had reduced its Libor submissions during the financial crisis as a result of senior management's concerns over negative media comment.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Several other banks, including HSBC, Royal Bank of Scotland and Lloyds are also facing an inquiry into rigged Libor manipulation, it has been reported.
The revelation prompted Barclays to announce yesterday that Diamond, along with a number of the bank's top executive, would forgo bonuses for this year. However, many believe that this penalty isn't enough with calls his resignation or even a criminal investigation into the matter.
Speaking to BBC's Newsnight, former City minister Lord Myners said that "this behaviour will only change if people face the prospect of criminal charges."
Ex-Barclays frontman Martin Taylor told BBC Radio 4's Today programme that Diamond should only stay is the board believes he is the only person who can turn this situation around. "If he can help clean out the stables, then he should stay. Only the board can judge that."
Former RBS head Sir George Mathewson also told Today that it would be "unacceptable" if senior management knew that Libor manipulation was going on.
City watchdog, the Financial Services Authority (FSA), said the regulation breaches were "serious, widespread and extended over a number of years". It accused Barclays of having inadequate systems and controls in place until June 2010 and of failing to review its systems and controls at a number of appropriate points.
By 10:14, Barclays was down 4.39% at 187.45p.
BC
-
Lloyds, Halifax and Bank of Scotland to shut another 45 branchesLloyds Banking Group, which includes Halifax and Bank of Scotland, is set to close a further 45 branches in 2024 - find out if a branch near you is closing.
-
US stock trading app Robinhood launches in the UK
The low-cost trading platform has opened another waiting list for British investors - following two failed attempts to launch in this country - and is hoping to be fully operational next year.
