A former Barclays executive has told MPs he was instructed by his then boss, Bob Diamond, to cut the bank’s Libor interest rate submissions. Jerry del Missier, who quit as Barclays chief operating officer, has appeared before the Treasury select committee.
Asked if a 2008 phone call from his boss was an instruction to cut the rates del Missier said “yes, it was”. Last month, Barclays was fined £290 million after admitting trying to manipulate Libor from 2005 to 2009. Barclays has said that Mr del Missier told his traders to cut the Libor interest rate submissions following a misunderstanding over a note sent from Mr Diamond. However del Missier told MPs he acted on the basis of a phone call from Diamond made the day before. “I took the action on the basis of the phone call that I had had with Mr Diamond,” Mr del Missier said.
“He [Bob Diamond] said that he had a conversation with Mr Tucker of the Bank of England, that the Bank of England was getting pressure from Whitehall around Barclays, the health of Barclays as a result of Libor rates and that we should get our Libor rates down and that we should not be outliers. “At the time, it did not seem an inappropriate action, given that this was coming from the Bank of England,” del Missier added. Asked, was it an instruction from Mr Diamond to him to lower Libor, del Missier replied “yes, it was.” “I passed the instruction on to the head of the money market desk. I relayed the content of the conversation I had with Mr Diamond and fully expected the Bank of England views would be fully incorporated in the Libor submission,” he said.
MPs asked del Missier how he managed to misunderstand a crucial email from Diamond sent the day after the phone call.
The e-mail had summarised a call between Diamond and Paul Tucker, deputy governor of the Bank of England. It appeared to suggest that the Bank might turn a blind eye if Barclays reduced its high Libor submissions, to avoid appearing under financial stress at the height of the international banking crisis. “Mr Tucker stated... it did not always need to be the case that we appeared as high as we have recently,” the notes, written by Diamond said. Del Missier told the committee he believed the Bank of England alone instructed Barclays to lower Libor submissions. Diamond had previously told the committee he did not believe the Bank of England instructed the bank to lower the inter-bank lending rate and did not believe he instructed del Missier to do so. Asked how he could have misinterpreted Diamond’s conversation, del Missier said: “I can only tell you what I clearly recall from the conversation.” (BBC)