The Barclays (NYSE:BCS) interest rate scandal earned its first big victim after chairman Marcus Agius resigned on Monday. The bank has owned up that its traders tried to influence the London interbank offered rate (Libor), used globally as a major benchmark for prices of derivatives and other financial products.
“Last week’s events — evidencing as they do unacceptable standards of behavior within the bank — have dealt a devastating blow to Barclays reputation,” Agius said in a statement. “The buck stops with me, and I must acknowledge responsibility by standing aside. I am truly sorry that our customers, clients, employees, and shareholders have been let down,” he said.
However, critics were still asking for chief executive Bob Diamond resignation as well, saying the responsibility was much larger.
“The buck in Barclays stops with Bob Diamond, and it is Bob Diamond who must accept responsibility,” said Labour politician John Mann, who is among lawmakers who will question both Diamond and Agius this week. “He (Diamond) must resign. He’s got to go. There is no role for people like him if banking is to be trusted again in this country and if British banking is to restore its tarnished reputation in the world, which of course is of great importance to our economy,” Mann said on Sky News.
Agius and Diamond are likely to be questioned about what the Bank of England and other regulators knew about the rate-rigging after documents related to a conversation between Diamond and BoE Deputy Governor Paul Tucker emerged.
Shareholders have been asking for the resignations of Diamond and Agius after Barclays was fined $453 million last week by British and U.S. regulators. The bank accepted it submitted artificially low estimates of its borrowing costs from late 2007 to May 2009 because higher submissions would make it seem like it was in trouble. Traders thought rival banks were doing the same. However, the employees did not provide “full and accurate information” to the authorities, an investigation has found.
Several other banks, including Citigroup (NYSE:C), HSBC (NYSE:HBC), UBS (NYSE:UBS), and Royal Bank of Scotland (NYSE:RBS), are being investigated by authorities in North America, Europe, and Japan as part of the global probe.
Barclays said senior independent director Michael Rake would lead an audit of the bank’s business practices. Rake will move up to the position of deputy chairman, and is the frontrunner to take over from Agius, who was the chairman of Britain’s third biggest bank for more than five years.