Barclays reveals Bank of England call memo

Barclays has revealed details of a phone call in 2008 between former boss Bob Diamond and the deputy governor of the Bank of England, Paul Tucker.

In new evidence to the Treasury Committee, Barclays says that Mr Tucker told the bank its setting of the Libor inter-bank rate need not be as high.

The rate-rigging scandal has forced the resignations of Mr Diamond and chief operating officer Jerry del Missier.

Barclays said Mr Diamond did not view Mr Tucker's comments as an instruction.

Mr Diamond is due to appear before the Treasury Committee on Wednesday, where he is expected to expand on conversations with the Bank of England over the Libor issue.

In fresh evidence posted on Barclays' website, the bank disclosed a conversation between Mr Diamond and Mr Tucker on 29 October 2008.

An internal memo sent by Mr Diamond to other Barclays executives said: "Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing.

"Mr Tucker stated the levels of calls he was receiving from Whitehall were senior and that, while he was certain that we did not need advice, that it did not always need to be the case that we appeared as high as we have recently."

Barclays said that subsequent to the call, Mr Diamond relayed the conversation to Mr del Missier.

Although Mr Diamond did not believe Mr Tucker was instructing Barclays to manipulate its Libor rate, it is possible that Mr del Missier concluded it was, the bank said.

Barclays said in its evidence: "Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep Libors so high and he therefore passed down a direction to that effect to the [traders]."

Barclays also said in the evidence that it told regulators it was concerned about the Libor rates posted by other banks, "and we were disappointed that no effective action was taken".

Mr Diamond's resignation came less than a week after Barclays was fined £290m for trying to manipulate the inter-bank lending rates.

BBC business editor Robert Peston disclosed on Tuesday that he was encouraged to go by the heads of the Bank of England and the FSA.

Mr Diamond said he was stepping down because the external pressure on the bank risked "damaging the franchise".

Mr del Missier also resigned, the third senior figure in two days to do so.

Barclays chairman Marcus Agius, who had announced his own resignation on Monday, will now take over the running of Barclays until a new chief executive is appointed.

Earlier, Lord Turner, the chairman of the Financial Services Authority, described the outrage that has built up over the bank's actions.

"The cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits - has justifiably shocked and angered people, in particular when we are facing hard economic times provoked by the financial crisis," he told the Financial Services Authority's annual meeting.

Source & Image : BBC