There was more bad news for banking bosses today as Bob Diamond has been forced to forego his bonus after Barclay’s was fined £290m after playing a “serious, widespread” role in the manipulation of crucial interest rates.
The fine, which came from the Financial Services Authority comes after the bank was found guilty of gross misconduct, and has forced Diamond, alongside other key executives to give up their bonuses. The misconduct was related to the setting of the London Interbank Offered Rate and the Euro Interbank Offered Rate – two of the most crucial rates in the global financial market. In a statement, the FSA stated;
“The integrity of benchmark reference rates such as Libor and Euribor is of fundamental importance to both UK and international financial markets…Firms making submissions must not use those submissions as tools to promote their own interests”
They then went on to warn other banks that they too will come under scrutiny, and that there will be more cases to come stating:
“The FSA continues to pursue a number of other significant cross-border investigations in this are and the action we have taken against Barclays should leave firms in no doubt about the serious consequences of this type of failure.”
Between 2005 and 2008, lobbyists consistently targeted Barclays staff in order to persuade them to submit estimates of their own interbank interest rates in order to produce profit for the bank and again, between 2007 and 2009, when the financial crisis was at its peak, the staff produced artificially low figures, resulting in Barclays appearing to be under less financial strain than their competitors.
Responding to the criticism, Diamond stated;
“The events which gave rise to today’s resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business. When we identified those issues, we took prompt action to fix them and co-operated extensively and proactively with the authorities…Nothing is more important to me than having a strong culture at Barclays; I am sorry that some people acted in a manner not consistent with our culture and values.”
With Natwest also struggling to cover up its embarrassment this week over its IT failures at the weekend, we can’t help but wonder when these financial farces will come to an end.