King Told Agius Diamond No Longer Had Regulator Support

Barclays Plc Chairman Marcus Agius
A screen grab shows Barclays Plc Chairman Marcus Agius giving evidence before a Parliamentary Treasury Select Committee on the Libor scandal at Portcullis House in London. Source: U.K. Parliament via Bloomberg

Barclays Plc Chairman Marcus Agius said Bank of England Governor Mervyn King told him that Chief Executive Officer Robert Diamond had lost the support of regulators, prompting his departure.

Diamond’s resignation was announced on July 3, the morning after a 6 p.m. London-time meeting with King, Agius and Michael Rake, the then-head of the bank’s audit committee, Agius told British lawmakers in the House of Commons’ Treasury Select Committee today.

King “was saying he had no power to direct us, but he felt it was sufficiently important for us to be told in absolute terms what the situation was,” Agius said. “It was made very clear that Bob Diamond no longer enjoyed the support of his regulators.”

Agius’s testimony follows a record 290 million-pound ($450 million) fine imposed on Barclays last month for the attempted manipulation of the London interbank offered rate, the benchmark for more than $360 trillion of securities. The scandal has cost the jobs of three top executives of Britain’s second-largest bank, including Agius and Diamond.

Following the conversation with King, Agius held a board meeting with the non-executive directors and then spoke with Diamond.

“The Governor made it perfectly clear that any decision that would be taken would be taken by the board or Bob Diamond individually,” Agius said.

‘Loaded Revolver’

Agius, who became chairman in 2007, relayed the King conversation to Diamond, who “was not in a good place,” he said. Diamond asked for some time to speak to his family before making a decision, Agius said.

“You were handing him a loaded revolver weren’t you?” Committee Chairman Andrew Tyrie said.

“We left confident that if he hadn’t already made the decision, he would make the right decision,” Agius said. “It would have been foolish in the extreme for us not to have referred back to him with our contingent, interim proposals.”

Diamond will forgo as much as 20 million pounds of bonuses after stepping down, Agius said. He will receive about 2 million pounds in salary and pension payments, about a 10th of his full entitlement.

Barclays had been under pressure to limit Diamond’s severance after the record fine. Diamond, Britain’s best-paid bank CEO, has earned about 120 million pounds in pay and bonuses since 2005, according to Manifest Information Services Ltd.

Losing Support

“We went from Wednesday night, when Diamond had the support of the regulators, to Monday night, when he did not have the support of the regulators,” Agius said.

Separately, Agius also said the bank’s relationship with its customers is suffering because some clients are often in financial difficulties.

“What has gone wrong is that we have an industry that believes it’s doing the right thing and we have a public that tells us, their representatives, that it’s not,” said John Thurso, a Liberal Democrat member of parliament.

“The whole nation is still suffering from the effects of the financial crisis,” Agius said. “Many of our customers are suffering because of their financial situation and they very often are unhappy with the way the relationship with the bank comes from.”

-- Editors: Jon Menon, Steve Bailey

Before it's here, it's on the Bloomberg Terminal. LEARN MORE