While ex-CEO Bob Diamond has just given evidence to a UK House Select Committee, this issue still has legs.
Barclays was fined $453 million by U.S. and British authorities, the first bank to settle in an investigation that is looking at more than a dozen others, including Citigroup, UBS and RBS. Naturally they need to look at others, as LIBOR is not just about one institution.
According to legal documents, we see that this does not appear to be a small group of isolated employees working in the dark.
In late November 2007:
The next day, a Barclays employee charged with submitting borrowing costs was "overruled" in submitting too high a cost during a phone conversation. During that discussion, the group "discussed their belief that other banks were submitting unrealistically low rates and speculated that other banks were basing submissions on derivatives' positions," according to the CFTC and FSA regulatory filings.And in December 4 2007:
On December 4, according to the FSA filing, a Barclays employee who submitted the bank's Libor costs emailed a manager: "Feeling increasingly uncomfortable about the way in which (US dollar) libors are being set by the contributor banks, Barclays included. … My worry is that we (both Barclays and the contributor bank panel) are being seen to be contributing patently false rates. We are therefore being dishonest by definition and are at risk of damaging our reputation in the market and with the regulators.The Establishment, the FSA, the Bank of England don't appear to have much enthusiasm for this issue and are dragging their feet. A couple of days ago Lord Turner told the FSA's public meeting that the full investigation into what went wrong will take years. Now there is someone in a rush. A key quote:
The LIBOR scandal has caused a huge blow to the reputation of the banking industry. 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.This is not about reputation, this is about fraud and it is about time that we see more aggressive investigations. Yet what we see from Barclays is a musical chairs with regards to who takes responsability. First they said sorry then they said bonuses would be lower then the chairman goes then the CEO goes then the Chairman comes back then the COO goes As to the Chairman, we will see if he remains when all dies down. He doesn't sound like he is going anywhere soon, from the Press Release, which doesn't sound like someone preparing his exit:
"Commenting, Marcus Agius said, “Bob Diamond has made an enormous contribution to Barclays over the last 16 years of distinguished service to the Group, building Barclays Investment Bank into one of the leading global investment banks in the world. As Chief Executive he has led the bank superbly. I look forward to working closely with the Chief Executives of our businesses and the other members of the executive Committee in leading Barclays world class businesses in serving our customers and clients and delivering value for our shareholders.”Barclays are reacting to events and appear to be testing the water to see if what they are offering the media dogs is enough. That's not good governance! While it is a nice change to see the heads of major corporations take responsability for what goes on in their organizations. As we have seen recently with media companies, I don't remember and I didn't know appears to be enough to push blame to others. Barclays, however are trying to do as little as possible, as late as possible. While I don't believe Barclays is threatened by this, stretching out the issue and the bad news won't help. Of course, as is usual in these types of situation, the politicians are baying for blood, or is that for attention. Labour leader Ed Miliband welcomed the decision but continued to call for a full judicial inquiry into banking culture.
"...this is about the culture and practices of the entire banking system, which is why we need an independent, open, judge-led public inquiry."Familiar words. If we talk about 'independent, open, judge-led public inquiry' what about politicians and political parties and their 'culture and practices' What about the Board of Directors which is missing in action? If the Senior Independant Director can't take over in this time and the resigned Chairman needs to come back, that Senior Independant Director needs to go. If the Board cannot take over in this time that Board needs to go Perhaps the problem is that only 2 if 12 Directors are women. I wouldn't be surprised. The big missing piece here are the shareholders: They are owners of the business but seem to continue to be asleep at the wheel...nothing new there: They have been silent on pay, until very recently They have been silent on good governance, until very recently They have been silent at annual meetings They have been silent on voting, until very recently
Onésimo Alvarez Moro
Posts
