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Marcus Agius is poised to resign as chairman of Barclays on Monday, in the hope that his departure will take the sting out of mounting criticism from politicians and shareholders over the bank’s role in the price-fixing of interbank lending rates.
Mr Agius has been sharply criticised by investors over several issues during his five-year tenure as chairman – notably in 2008 when they felt he failed to protect their shareholder pre-emption rights by raising emergency financing from the Middle East, then by pushing through last year’s generous pay deal for chief executive Bob Diamond.
It is unclear whether the bank has a firm replacement lined up, though Sir Michael Rake, the bank’s senior independent director, may take over as chairman on a temporary basis, or may ask Sir John Sutherland, the former Cadbury chairman, or Alison Carnwath, who heads the remuneration committee, to assume the role, according to people close to the situation.
Barclays last week paid a record £290m to UK and US regulators for submitting fraudulent bids to the process for setting the London Interbank Offered Rate, which is the reference point for $360tn in contracts worldwide. The bank admitted that its traders sought to manipulate the rates and that it also understated its borrowing costs during the financial crisis because it believed other banks were doing the same.
It is not clear whether Mr Agius’s planned departure will do enough to satisfy the angry politicians and the public who have been calling for heads to roll in the wake of the settlement.
Mr Diamond was already facing a grilling over the scandal by parliament’s Treasury select committee on Wednesday, and new details emerged on Sunday about his personal involvement with the setting of the Libor rate.
In 2008, Mr Diamond spoke to Paul Tucker, deputy governor of the Bank of England, about Barclays’ submissions to the Libor process. When word of that conversation was passed down, managers at the bank “mistakenly” believed they had been granted permission to submit artificially low estimates.
The conversation is described without names in the official UK and US settlement documents from last week’s fine. They say a senior BoE official asked a senior Barclays manager on October 29 2008 why Barclays’ Libor submissions were higher than those of other banks.
Three people familiar with the contents confirmed that the call was between Mr Diamond and Mr Tucker, who heads the BoE’s financial stability arm.
Regulators across the globe probe alleged manipulation by US and European banks of the London interbank offered rate and other key benchmark lending rates
After their conversation, lower-level Barclays’ officials told the employees who submitted the bank’s Libor estimates to lower their bids because they “believed mistakenly that they were operating under an instruction from the Bank of England (as conveyed by senior management) to reduce Barclays’ Libor submissions”, according to the UK Financial Services Authority’s description of what happened.
US settlement documents say that Mr Tucker, who is a leading candidate to succeed Sir Mervyn King as BoE governor, did not give such an instruction and that Mr Diamond did not think he had done so. Barclays has admitted understating Libor bids on other occasions from August 2007 to May 2009.
David Cameron, the British prime minister, on Saturday ordered an independent review into the workings of interbank lending rates
and the Treasury said it would set out plans this week for directors of banks that collapse to face disqualification from ever working in the financial services industry again.
US investigators are pushing forward with criminal investigations of the Barclays traders who allegedly sought to manipulate Libor rates to make money on derivatives, even as Vince Cable, the UK business secretary, called for a similar probe in the UK. He said the Serious Fraud Office was having “a fresh look” at the evidence produced by the recent investigation.
Investors said the coming days would be key for Mr Diamond’s tenure at the helm of Barclays. So far shareholders have stopped short of calling publicly for Mr Diamond to go and many are concerned about the lack of a credible internal replacement.
Some shareholders are demanding a face-to-face explanation directly from Mr Diamond, and many fear that an increasingly hostile political environment could make it hard for him to continue.
“The board is united behind him at the moment,” said one person close to the bank. “But there is a recognition that politicians can make the situation far more difficult.”
More than a dozen banks are also under investigation, although further settlements are said to be at least a few months away.
Additional reporting by Jim Pickard