LONDON (Reuters) - Barclays Chairman Marcus Agius faced a grilling by MPs on Tuesday as part of a probe into the Libor interest rate rigging scandal.
Following are comments from Agius from the hearing in parliament’s Treasury Select Committee:
“I had a conversation with my board … who were not in a happy place as you can imagine. Just the non-executives, we had a telephonic board meeting, at which we discussed what had happened…. We concluded that we had no choice but to call for his resignation.”
“We explained what had happened ... he was utterly depressed as you can imagine. The conversation was not long. He asked for time to talk to his family, and we left confident that if he hadn’t already made the decision, that he would make the right decision.”
Question: Did you have any conversations about Mr Diamond’s position with the governor of the Bank of England?
“Yes. We went to see him and we had a conversation, the two of us (Sir Michael Rake and Agius) with him, at which it was made very plain to us that Bob Diamond no longer enjoyed the support of his regulators.”
“I was notified first of the investigation and that was the first I heard of any of these practices - or the possibility of any of these practices - in April 2010.”
“It did not occur to us, as I said, our principal concern was the state of the funding market rather than the operation of the Libor market as a technical matter.
“If your question is ‘should we have asked those questions’, evidently we should have done but as I said at the time we were more preoccupied, we were at a moment of existential risk.”
“I think it reflects the extraordinary times that existed then.” Asked does it not reflect your procedures or compliance? “No. Of course not. Of course not. That is not behaviour that would be in the normal course.”
“That decision was taken by a certain individual but did not come up to the board.”
Asked who would have taken that decision? “I don’t know.”
“I was not aware of that note, or that conversation taking place with Paul Tucker until quite recently. Did I talk to John Varley about our anxieties about funding? Yes I did.”
“For many years the activities of the Libor market were seen to be low risk because the passage of the Libor rate was very constant, the spreads were very narrow, very little happened and secondly because of the way the Libor rate is struck the chances that anybody could manipulate the rate successfully was deemed to be very very low.”
“The solution we devised was that the four senior executive officers who were on the deck when these matters occurred should recognise their responsibilities by forgoing their bonuses.
“We hoped obviously that would be deemed proportionate. Evidently we were wrong because the public outcry afterwards was extraordinarily great.”
“So as we went into that weekend I was faced as Chairman with the dilemma that there was far greater reputational damage than we had anticipated, and certainly far greater than we had sought, that there was a requirement for some further action from the bank.”
“We have tried very hard to manage compensation down, we have tried very hard to achieve a far better balance as between the shareholders and between the employers. But there’s a natural limit to how far we can go.
“If we reduce the payment of our people too fast, they leave, if we don’t go fast enough, our shareholders vote us out, we have to somehow strike that balance.
“I do believe that we have done as much as we could in the circumstances, and I think we have a long way to go, I’m completely sympathetic to shareholders.”
“I think this is a very important letter and one we took very seriously. I have not had another letter similar to this.
“I don’t wish to be pedantic but I don’t regard this as damning. I regard this as a firm letter from our regulator. I think this is a very important letter and one we took very seriously. I have not had another letter similar to this.”
Question: What word would you like to try and summarise your relationship with the regulator? Strained? Difficult?
“Strained I think would be reasonable.”
“Bob Diamond has voluntarily decided to forgo any deferred consideration and deferred bonuses to which he otherwise would have been entitled to. The maximum amount would be 20 million pounds.”
“The message we received, in strong terms, from the market, was that the one outcome the shareholders did not want to see was the removal of Bob Diamond (..) they believed in him as very effective chief executive.”
Reporting by UK bureau