Fixing LIBOR: Some Preliminary Findings
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House of Commons Treasury Committee Fixing LIBOR: some preliminary findings Second Report of Session 2012–13 Volume II Oral and written evidence Ordered by the House of Commons to be printed 9 August 2012 pursuant to Standing Order No. 137 HC 481-II Published on 18 August 2012 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Treasury Committee The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of HM Treasury, HM Revenue and Customs and associated public bodies. Current membership Mr Andrew Tyrie MP (Conservative, Chichester) (Chairman) Michael Fallon MP (Conservative, Sevenoaks) Mark Garnier MP (Conservative, Wyre Forest) Stewart Hosie MP (Scottish National Party, Dundee East) Andrea Leadsom MP (Conservative, South Northamptonshire) Mr Andy Love MP (Labour, Edmonton) John Mann MP (Labour, Bassetlaw) Rt Hon Pat Mcfadden MP (Labour, Wolverhampton South West) Mr George Mudie MP (Labour, Leeds East) Jesse Norman MP (Conservative, Hereford and South Herefordshire) Teresa Pearce MP (Labour, Erith and Thamesmead) David Ruffley MP, (Conservative, Bury St Edmunds) John Thurso MP (Liberal Democrat, Caithness, Sutherland, and Easter Ross) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/treascom. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in printed volume(s). Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are Chris Stanton (Clerk), Lydia Menzies (Second Clerk), Jay Sheth, Adam Wales (Committee Specialists), Alison Game (Senior Committee Assistant), Steven Price and Lisa Stead (Committee Assistants) and James Abbott (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Treasury Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5769; the Committee’s email address is [email protected] Witnesses Wednesday 4 July 2012 Page Bob Diamond, former Chief Executive, Barclays PLC Ev 1 Monday 9 July 2012 Paul Tucker, Deputy Governor, Bank of England Ev 31 Tuesday 10 July 2012 Marcus Agius, Chairman, Barclays PLC Ev 50 Monday 16 July 2012 Jerry del Missier, former Chief Operating Officer, Barclays PLC Ev 76 Lord Turner, Executive Chairman, Andrew Bailey, Head of the Prudential Business Unit, Tracey McDermott, Acting Director of Enforcement and Financial Crime, Financial Services Authority Ev 89 cobber Pack: U PL: COE1 [SO] Processed: [20-08-2012 10:05] Job: 022927 Unit: PG01 Source: /MILES/PKU/INPUT/022927/022927_o001_db_Copy of Copy of TC 04 July 12 CORRECTED.xml Treasury Committee: Evidence Ev 1 Oral evidence Taken before the Treasury Committee on Wednesday 4 July 2012 Members present: Mr Andrew Tyrie (Chair) Michael Fallon Mr Pat McFadden Mark Garnier Mr George Mudie Stewart Hosie Jesse Norman Andrea Leadsom Teresa Pearce Mr Andrew Love Mr David Ruffley John Mann John Thurso ________________ Examination of Witness Witness: Bob Diamond, former Chief Executive, Barclays, gave evidence. Q1 Chair: Thank you very much for coming in was, “Let’s get to the bottom of it. Let’s identify the today, Mr Diamond. This hearing is subject to problem; take the actions necessary; learn our lessons parliamentary privilege and we will hope and expect and, if any of our customers and clients got hurt, let’s that you will as a result be able to speak freely and, make them good.” That attitude is recognised by the of course, even more freely now you have resigned. three regulatory agencies in what they wrote, but it is The hearing is about turmoil at one of Britain’s not coming out in the court of public opinion over the leading financial institutions and certainly I accept that past week. Barclays has suffered bad publicity partly because you Fundamentally, my decision to resign was that my settled first. None the less, these issues go much wider leadership and questions about my leadership have than that LIBOR settlement, even though that did been a part of that. The best way I think I can help appear to have precipitated your resignation. bridge Barclays from the turmoil of being the only I think before we go any further, given that you have one out, so that this is looked at in the true context of resigned, I would like to give you an opportunity to being about an industry and about LIBOR in addition explain your reasons. to Barclays, and prevent the damage to the reputation Bob Diamond: Thank you Chairman, and thank you that has happened over the past week, the best way everyone for being here. for me to do that was to step down but to continue to Wow. I love Barclays. That’s where it starts. I love come here and answer the questions of the Committee. Barclays because of the people. It is 16 years ago I love Barclays. History will judge Barclays as an today, on 4 July 1996, that I began at Barclays, and it has been 16 years of tremendous enjoyment; and that incredible institution because of its people. We need enjoyment has been driven by the incredible 140,000 to get through this period and the best way to do that people in over 50 countries around the world. was for me to step down. Chairman, as you said, this week the focus has been on Barclays, in many ways because they were first. I Q2 Chair: Why did you change your mind over the worry that the world looks at Barclays and a small weekend? What was the trigger? There have been group of traders, or a group of traders, who had reports that there was pressure from the regulators. Is reprehensible behaviour, and that that is being put on that correct? Barclays in a way that is not representative of the firm Bob Diamond: Let me explain why I changed my that I love so much and the way they treat their mind. That is a good question. It was not over the customers and clients, and the way they deal with weekend because we worked over the weekend on a problems. communication to our colleagues internally. We did That comes to the core of the issue: clearly there were that knowing we had the support of the board and the mistakes. Clearly there was behaviour that was support of our shareholders, with whom we had been reprehensible; but as soon as this was recognised working from the announcement toward the end of Barclays put all forces—if there’s a mistake, if there’s the week, of our colleagues, clients, customers and a problem, how do we handle it? What do we do about regulators. It was clear to me on Monday that that it? At Barclays it has been three years with three of support wasn’t as strong, and that I needed to take this the most important regulatory agencies in the world step in this bridge. The support from the regulators looking at millions of files; and all three regulatory was not as strong as it had been and I needed to take agencies applauding Barclays for its co-operation, analysis and proactivity. We hired two external firms this step. to work with two members of senior management, reporting to the chairman of the board and the Q3 Chair: I just want to pin that down. Did one or chairman of the audit committee. The attitude of more of the senior regulators ring Marcus Agius? Barclays three years ago when this was recognised Bob Diamond: I don’t know. cobber Pack: U PL: COE1 [E] Processed: [20-08-2012 10:05] Job: 022927 Unit: PG01 Source: /MILES/PKU/INPUT/022927/022927_o001_db_Copy of Copy of TC 04 July 12 CORRECTED.xml Ev 2 Treasury Committee: Evidence 4 July 2012 Bob Diamond Q4 Chair: When Marcus Agius spoke to you or you Bob Diamond: I knew nothing about it at the time spoke to him, did he refer to any pressure of any type that I was appointed. Correct. I don’t know anything that had come? about it. Bob Diamond: That is probably a question for Marcus, who I know is here next week. Q12 Chair: We’re talking about September 2010 here. Q5 Chair: I am asking you to tell me what he would Bob Diamond: Correct. have told you in that conversation. You would have had a conversation with your chairman about this, and Q13 Chair: And you know nothing at all about the about the sustainability of your continued role as suggestion that you were asked to provide assurances chief executive. that you would challenge your long-term colleagues Bob Diamond: I would say broadly speaking it was at BarCap not to take excessive risks? just as I said. With the focus of intensity on my Bob Diamond: I don’t remember any specific leadership, it was better for me to step down. comments, but I am sure there were discussions with the regulators during the process of my succession. My memory is more around whether, having been Q6 Chair: Why are you so reluctant to tell us what associated with the investment bank for a number of may have transpired with those regulators over the years, I would be able to disassociate myself so, as a weekend? We are going to have them before us.