28 June 2012 05:08 ET
The former chief executive of Barclays Martin Taylor has told the BBC that the bank has engaged in “systematic dishonesty”.
It comes after Barclays was fined £290m ($450m) for trying to manipulate interest rates.
Mr Taylor said that Barclays’ deception looks like a deliberate strategy as it had been going on for years.
The Chancellor, George Osborne, will make a statement on Barclays in the House of Commons later on Thursday.
Other banks are also being probed.
Tracey McDermott, director of enforcement at the FSA, which imposed fines alongside the US financial regulator, told the BBC: “We have a number of investigations that are ongoing.
“Obviously we need to look at each case on its own particular facts but the initial indications are that Barclays was not the only firm that was involved in this.”
Lord Myners: This is the most corrosive behaviour I have seen in a major UK financial institution in my career
The US Department of Justice also said criminal investigations into “other financial institutions and individuals” were ongoing.
Other big names believed to be under investigation include Citigroup, JP Morgan, Deutsche Bank, HSBC and Royal Bank of Scotland.
The scandal is putting pressure on Mr Diamond.
Mr Taylor, who was chief executive of Barclays from 1994 to 1998, said: “It’s hard to believe that a policy which seems to be so systematic was not known by people at or very near the top of the bank.”
Former City minister Lord Myners told the BBC that the people at the top should take responsibility.
The Liberal Democrat peer, Lord Oakeshott, said that if Mr Diamond had any shame, he would resign.
Barclays has said its actions “fell well short of standards”.
In response, chief executive Bob Diamond and three other top executives at the bank are to give up their bonuses this year.
Investigators say that Barclays’ traders lied to make the bank look more secure during the financial crisis and, sometimes – working with traders at other banks – to make a profit.
Barclays has admitted that a group of traders lied about what it was costing the bank to borrow.
Now, why does this matter?
It matters because lots and lots of deals involving clients of Barclays used the interest rate into which Barclays was feeding this information, about its own borrowing costs, to determine the profit and loss on their own deals.
It’s quite hard to think of behaviour by a bank as shocking as this: not telling the truth about what it is costing you to borrow, that then becomes a benchmark for pricing other deals.
The statement from the US regulator, which levied a big chunk of the fine, talks about how Barclays was working with other banks to try to fix this interest rate.
This of course implies that Barclays is simply the first bank to settle and we will see fines and punishments against some of the other big banks of the world.
Barclays’ misconduct relates to the daily setting of the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).
These are two of the most important interest rates in the global financial markets and directly influence the value of trillions of dollars of financial deals between banks and other institutions.
They can also affect lending rates to the public, for instance with some mortgage deals.
It is not yet clear whether Barclays staff actually succeeded in manipulating the interest rates to the bank’s advantage and therefore whether it had any impact on borrowers.
While the FSA said only that the Barclays employees had attempted to do so, the US Department of Justice said that on some occasions they did affect the Libor and Euribor rates.
Former City minister Lord Myners told the BBC that the people at the top should take responsibility for “a complete cultural failure”.
He said the behaviour of Barclays staff was the worst he had seen.
“This is the most corrosive failure of moral behaviour I have seen in a major UK financial institution in my career,” he said.
“I think fines and public criticism will not stop these behaviours. These behaviours will not stop until the people perpetrating it or responsible for overseeing them face the prospect of criminal charges and the prospect of going to jail.”
The former Liberal Democrat Treasury spokesman, Lord Oakeshott said: “If Bob Diamond had a scintilla of shame he would resign.”
“If Barclays’ board had an inch of backbone between them they would sack him,” he said.
Andrew Tyrie, chairman of the Commons treasury committee, said it would summon Mr Diamond to account for what had happened.
“Banks were clearly acting in concert. I fear it’s not going to be the end of the story, that we are going to find that other banks have been involved,” he said.
The fine imposed on Barclays is part of an international investigation into the setting of interbank rates between 2005 and 2009.
Each day the British Bankers’ Association (BBA) and the European Banking Association publish the the Libor and Euribor rates by taking an average of the estimated rates submitted to them by leading banks.
Tracey McDermott, of the FSA, says the misconduct is some of the most serious the regulator has ever seen
Between 2005 and 2008, the Barclays staff who submitted estimates of their own interbank lending rates were frequently lobbied by its derivatives traders to put in figures which would benefit their trading positions, in order to produce a profit for the bank.
And between 2007 and 2009, during the height of the banking crisis, the staff put in artificially low figures, to avoid the suspicion that Barclays was under financial stress and thus having to borrow at noticeably higher rates than its competitors.
The FSA pointed out that Barclays traders were quite open about their routine attempts to lobby their colleagues who submitted the bank’s estimate of its borrowing costs to the BBA.
It was particularly concerned because it appeared to be “accepted culture” among some staff.
“Requests to Barclays’ submitters were made verbally and a large amount of email and instant message evidence consisting of derivatives traders’ requests also exists,” the FSA said.
In one instance, a trader recounted a conversation in which he had “begged” the submitter to put in a lower Libor figure.
I owe you big time… I’m opening a bottle of Bollinger”
Exchange involving Barclays staff
“I’m like, dude, you’re killing us,” he said. His manager replied, “just tell him to… put it low”.
In turn, the staff submitting the data would respond to the traders’ requests.
“For you…anything,” said one. “Done… for you big boy,” said another.
And: “I owe you big time… I’m opening a bottle of Bollinger.”
Bob Diamond was born on July 27th, 1951 according to http://en.wikipedia.org/wiki/Bob_Diamond_(banker)
July 27th, 1951
7 + 27 +2+0+1+1 = 38 = his personal year (from July 27th, 2011 to July 26th, 2012) = Take care of yourself.
38 year + 6 (June) = 44 = his personal month (from June 27th, 2012 to July 26th, 2012) = It is what it is.
44 month + 28 (28th of the month on Thursday June 28th, 2012) = 72 – his personal day = Greed.
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