“We are being dishonest by definition and [we are] at risk of damaging our reputation in the market and with the regulators.”
Thus wrote one Barclays banker, on December 4 2007, to “manager E”, according to regulatory documents published this week by the UK Financial Services Authority. Five years on it is clear that the subject of those prophetic words – the price-manipulation scandal in the interbank lending market whose vast scale was unveiled by regulators this week – has done a lot more than just reputational damage.
Barclays has paid a record £290m in combined fines to settle investigations by the FSA, the US Department of Justice and the Commodity Futures Trading Commission (CFTC), the US futures regulator.
Now the scandal threatens to unseat the bank’s top management, with some shareholders, commentators and politicians calling for the head of Bob Diamond, chief executive; David Cameron has gone almost as far. “People have to take responsibility for their actions and show how they are going to be accountable for those actions,” the UK prime minister said on Thursday.
On top of the wrongs of the scandal involving the manipulation of the London Interbank Offered Rate (Libor) – a central financial reference point for everything from the rates charged to credit card users to the pricing of commercial loans – in the eyes of many politicians and much of the general public Mr Diamond carries a stigma: he is a banker.