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Diamond says he felt "physically ill" over Libor scandal

He told MPs at the parliamentary inquiry that Barclays had been unfairly singled out when other banks were involved too

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Former Barclays boss Bob Diamond told MPs on Wednesday that he had felt “physically ill” when he heard about the rate fixing scandal last week but that his bank had been unfairly singled out.

Diamond resigned on Tuesday after Barclays settled its involvement in the Libor fixing scandal with US and UK regulators when it paid £290 million fine.

At a parliamentary committee on Wednesday the US investment banker ,who until Tuesday was one of the world's highest paid and most powerful financial executives, acknowledged "reprehensible behaviour" among his group's traders.

The wrongdoing was "not representative of the firm that I love so much", Diamond said. But he also insisted that Barclays was being made a scapegoat because it had cooperated with the authorities to help unearth the misdeeds.

"This week the focus has been on Barclays because they were the first," Diamond said, describing years of cooperation with regulatory agencies to uncover the practice.

"I think it's a sign of the culture of Barclays that we were willing to be first, we were willing to be fast and we were willing to come out with this."

Of his own decision to step down, a day after saying he wouldn't, he said he had realised that he had become a lightning rod for criticism. "The focus of intensity was my leadership. It was better for me to step down."

Barclays has acknowledged that its traders colluded with others to manipulate the London Interbank Offered Rate, or Libor, the rate that banks borrow from each other and which underpins trillions of dollars in global contracts.

In addition to the manipulation by traders, which took place from 2005-2009, Barclays has also admitted it deliberately understated its submissions of Libor rates at the height of the 2008 economic crisis to make its balance sheet look stronger.

That has led to wider questions about the behaviour of other banks, the government and banking regulators.

Politicians questioned Diamond over a 2008 memo, in which he appeared to suggest that the Bank of England or the government might be giving the firm the nod to report that it was able to borrow money at lower rates to make it look better.

At the time, Barclays was reporting Libor funding costs that were among the highest of the large banks, even though others were in much worse shape.

photo credit: Reuters


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