Bob Diamond says King did not have authority to force him out

Friday, 03 May 2013 08:28

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Bob Diamond, the former Chief Executive at Barclays Bank who was forced to resign over the Libor scandal has claimed in an interview with the New York Times that he did not know how the Libor system worked.

Mr Diamond was forced to resign from the bank after it emerged that he was in charge when some Barclays traders were involved in the manipulation of the Libor interbank lending rate that is used to set the rate of common financial products including mortgages and personal loans. Barclays had to pay a £290 million fine as a result. Traders gave false information in order to boost the banks and their own profits.

In his first major interview since he left Barclays last summer, Mr Diamond admitted that he underestimated the strength of feeling against bankers.

“I think that the anger against banks and bankers, particularly in the UK, was deeper than I realised,” he said.

However, he did not take back comments he made at a parliamentary hearing a year before the Libor scandal broke that “the period of remorse and apology for banks” should be over.

Mr Diamond, who earned £25 million in the year before he left, claims in the interview that he was never motivated by money. He lives in a $37 million apartment near Central Park in New York.

Mr Diamond said in his interview that he did not know which Barclays traders were involved in the abuse of the Libor system and that he “didn’t even know the mechanics of how Libor was set.”

He said that when he was made aware of some of the messages sent between traders “I got physically sick, and I couldn’t believe some of the phone conversations that were happening between traders.”

Mr Diamond tries to position himself in the interview as a “regular guy” who takes the subway to work in a modest office. He was forced to resign because the Bank of England and the UK government lost confidence in him and what he came to represent.

The New York Times quotes Martin Wolf of the Financial Times explaining how what Mr Diamond came to represent was ultimately the cause of his downfall, helped of course by the Libor scandal.

Mr Wolf said: “Bob represented investment banking big time. He represented the success of it — but also the sense that investment banking is dicey and not a completely sound business. He represented a way of doing business that we’ve become very uncomfortable with.”

Mr Diamond left Barclays with a £2m payoff and is thought to have earned around £120 million in the seven years he worked for the bank from 2005. He has created a family foundation that has given millions of dollars to educational projects.

The Governor of the Bank of England, Sir Mervyn King summoned the then Barclays chairman Marcus Agius to tell him that Mr Diamond must resign. The UK Chancellor, George Osborne said following Mr Diamond’s resignation, “I hope that it is the first step toward a new culture of responsibility in British banking.”

Mr Diamond says that he did not believe Sir Mervyn King had the authority to force him out of his position.

He plans to move back into the spotlight and the banking sector by starting up his own merchant bank.

 

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