Bob Diamond plans to stay on. He said as much last week. In an interview given to the Telegraph today, Marcus Agius says: “Bob’s position first of all is he’s not culpable of anything.” When Morgan Stanley’s banking analysts met with Bob last week, his main hope appeared to be that the implementation of the Vickers recommendations would be seen as sufficient to placate public outrage and ensure the Libor scandal would never happen again. At worst, Bob is said to be considering the voluntary return some of the enormous bonuses he received between 2005 and 2008 when the rate-rigging took place.
None of this may be enough. Reasons for Bob to go are piling up in the wings. When he takes centre stage at the Treasury Select Committee on Wednesday, they may prove suffocating. Here are the main reasons Bob Diamond may not survive the week.
1. He appears directly implicated
Bob Diamond himself spoke to Paul Tucker about the Libor rate in autumn 2008. “After their conversation took place, senior Barclays’ management on October 29 2008 gave an explicit instruction to reduce Libor submissions,” wrote Robert Peston last week.
There is no record of the conversation between Tucker and Diamond. Both men have different memories of it. But there is an agreement that: “”no instruction for Barclays to lower its Libor submissions was given during this telephone conversation”. Nevertheless, the FSA says that as the substance of Diamond’s conversation with Tucker was relayed down the chain of command, a misunderstanding occurred and Barclays’ Libor submitters, “believed mistakenly that they were operating under an instruction from the Bank of England (as conveyed by senior management) to reduce Barclays’ Libor submissions”.
As CEO, Diamond surely had a duty to ensure his edicts were implemented accurately?
2. By his own measure, he has failed
Barclays has done a lot to push responsible corporate citizenship in recent years. Its results announcements almost always include a lengthy and incongruous section on what its been doing for the community. As an organisation, Barclays recognises the importance in being seen to be good. That will be hard as long as Bob remains in charge.
Most damaging, is a comment Diamond made in a BBC interview last year. “For me the evidence of culture is how people behave when no-one is watching,” he said. On this basis, Barclays’ culture doesn’t look admirable.
3. He had the chance to put things right, and didn’t
“Barclays’ compliance department failed to act on three separate internal warnings between 2007 and 2008 about conflicts of interest and “patently false” submissions by its staff,” said the FT this weekend. Bob wasn’t the compliance department, but he was the chief executive. He should have been responsible.
4. Rumbles of extradition
The FBI is said to be investigating 14 Barclays traders at the centre of the scandal. If culpable, they could be extradited. But what if they argue they were following management orders, as suggested by point 1?
Diamond’s future appears to hang on what really happened during that conversation with Tucker, and how the content of that call was communicated subsequently. Can he really hang on while a full scale investigation establishes this?
Separately, and on a different note, Bloomberg notes that CA Cheuvreux, the equities trading and research unit owned by Credit Agricole, is unprofitable and may be sold at a loss this week to whoever will take it on (possibly Kepler Capital Markets or Jefferies). Strangely, you would never know this by looking at Cheuvreux’ own careers site. There, it claims to be in growth mode and ambitious to, “expand its presence on international financial markets.” Moral of the story: do your due diligence; don’t rely solely on banks’ own sites for information. You may regret it if you do.
Bob Diamond is excellent and Barclays is full of hard working, talented individuals whose integrity is not in question, said Marcus Agius. (Barclays)
Barclays needs to find a new chairman who is tough enough to find a replacement for Bob Diamond. (Breaking Views)
RBS dismissed 10 people over Libor maniupulation. (Bloomberg)
Middle office job are moving on to cheaper locations. (New York Times)
Ex-Goldman banker moves into hospital administration. (Bloomberg)
Shares in 3i rose 6% after it cut 37% of all staff. (Telegraph)
Seymour Pierce is understood to have been sold to a company in the Ukraine or Kazakhstan. (Telegraph)
ICAP has made 60 of its 5,000 staff redundant. (Evening Standard)
Women who run hedge funds always get asked the same questions by potential investors – always involving marriage and children. (Financial News)