- By Region
Marcus Agius’s expected resignation announcement as chairman of Barclays on Monday leaves the bank with another question to add to the many that politicians and shareholders already have about the Libor price-fixing scandal – will the gesture be enough to quieten the bank’s critics and secure chief executive Bob Diamond in his job?
Mr Diamond has come under angry fire from MPs in recent days, following last week’s £290m fine to settle a regulatory probe on both sides of the Atlantic into Barclays’ involvement in the manipulation of interbank lending rates.
So far senior members of the British government, such as David Cameron and George Osborne have stopped short of calling explicitly for his resignation, as have shareholders. But there is a recognition among investors that, with the Treasury select committee hearing looming on Wednesday, the atmosphere could sour further in the coming days.
One top 30 shareholder said Mr Diamond’s position could become untenable if politicians continued to criticise Barclays over its attempt to rig the market in the London Interbank Offered Rate (Libor).
“The decision over Mr Diamond’s position is one for the board, but his position could become untenable if the prime minister and other politicians demand a change at the top,” the shareholder said.
Another top investor described the political intervention in the case as “mob rule”.
For the time being, however, the bank and its board are keeping their heads down, hoping that the pressure will lift and the government’s tactic of dropping strong hints that Mr Diamond should take responsibility for the Libor abuses by resigning will come to nothing, especially if Mr Diamond acquits himself well at the TSC.
“The government has put a knife on the table,” said one person close to the Barclays board. “They want Bob to pick it up and do the honourable thing. But for the time being at least, he’s not doing that.”
The person said there was unanimity on the board that they should continue to back Mr Diamond.
Many investors remain loath to call explicitly for the ousting of Mr Diamond. Some believe he is still the right man for the job, with a sound strategy to return the bank to growth. But most appear fearful that to ditch a CEO without any obvious successor from within the bank could be counterproductive at a time of such market volatility.
All the same, even among his supporters patience appears to be running out for the man who is better known for his pay package than for his record of generating returns for shareholders. “We have had the furore over Mr Diamond’s bonus and now we have this Libor scandal. It is one more big mistake. When you want to change the direction of a company, you change the boss,” one top investor said.
“The only thing the top management at Barclays appear to care about is bonuses and how much money they make. The bank appears prepared to cut any corner to get a bigger bonus. The culture at the company is wrong. It is a culture geared to making money, but with little concern for the shareholder or whether the business is run properly.”
Investors also want answers – either directly or via the TSC – particularly over the issue of how much Mr Diamond knew about the manipulation of Libor rates amid the volatile markets of 2007 and 2008. It was during that period, according to last week’s reports from regulators, that Barclays deliberately “lowballed” the rates at which it said it could borrow from rivals, in an effort to calm market jitters about its health.
“Senior management” were aware of this strategy, the probes said. Mr Diamond will come under pressure, both from the TSC and from investors, to reveal whether he himself – at the time head of the investment banking business within which the Libor rates were set – was covered by that phrase.
If he did know, Mr Agius’s departure will do little to silence those who are baying for his blood.