Barclays CEO Diamond Defiant Under Fireby
Barclays Chairman Marcus Agius resigned today in the latest attempt to limit the damage rocking the bank since it agreed to a record $455 million settlement last week. As part of the settlement with British and U.S. regulators, Barclays admitted to manipulating a key interest rate that underpins $350 trillion worth of car loans, mortgages, and other debt.
While Agius bowed out, Robert Diamond, the chief executive, still heads the bank and is defiant in the face of calls for his resignation. In a letter Monday to employees, Diamond said he has the “full support” of the board’s nonexecutive directors and would stay on to implement reforms. “I am disappointed because many of these behaviours happened on my watch. It is my responsibility to make sure that it cannot happen again,” he wrote. (We’ve posted the full text of the letter here.)
Christopher Wheeler, a Mediobanca banking analyst in London told Bloomberg News that politicians will see Agius’s resignation as “taking a bullet for Bob Diamond. They realized they needed to do something, and Agius was chairman during the time they got fined for—but will it be enough?”
When British and U.S. regulators announced the settlement last week, Diamond, who ran the bank division involved in the scandal, said he’d forgo a bonus this year. That didn’t quell calls for his resignation from members of parliament and British papers. Agius’s resignation hasn’t seemed to take the spotlight off Diamond either. Prime Minister David Cameron has been stepping up his rhetoric and today announced a new inquiry into the British banking system. And Labour leader Ed Miliband continues to call for Diamond’s resignation. “If you go out and nick £50 from Tesco, you are punished,” Miliband told ITV’s Daybreak program. “If you fiddle, lie, cheat to the tune of millions of pounds, you should also have the full force of the law brought against you. … I really don’t believe that the leadership and restoring trust in Britain’s banking can be done by Bob Diamond.”
Barlcays spokesman Chris Simple on Monday said the bank had no comment beyond Diamond’s letter.
Diamond is no stranger to controversy. In June 2010, a U.S. bankruptcy judge said Diamond was “evasive” in his testimony about whether Barclays received a “windfall” when it scooped up Lehman Brothers’ brokerage in September 2008. (That legal battle is still making its way through the courts.) And this April, investors revolted at the news that Diamond had a $19.5 million compensation package. More than a quarter of shareholders voted down the pay—but that wasn’t enough to roll back the package.
Diamond is scheduled to testify July 4 before British lawmakers on the Treasury Select Committee, where he’ll continue to face the regulatory heat.