Diamond Seen Surviving Libor Storm After Barclays Plunges

[REO 54]

Another bankster get a slap on the wrist....


Barclays Plc (BARC)’s investors aren’t joining lawmakers in calling for Chief Executive Officer Robert Diamond to quit, though they say record fines for Libor manipulation threaten to doom his turnaround plan for the bank.

Shares of the U.K.’s second-biggest bank by assets plunged 16 percent yesterday, the most in three years, on speculation Diamond’s job is at risk and that billions of dollars of lawsuits will follow the $451 million in penalties imposed by the U.S. and U.K. Regulators worldwide are probing at least five other firms, including Citigroup Inc. (C) and Deutsche Bank AG. (DBK)

“He’ll probably weather the storm,” said Julian Chillingworth, who helps manage 16 billion pounds ($25 billion) at London’s Rathbone Brothers Plc, including Barclays shares. “There’ll be more regulation. Governments globally are very much on the banks’ case. It may turn out he’s slightly bailed out as other banks have to come clean.”

Diamond, 60, ran the London-based bank’s securities unit during the period probed. He and three top lieutenants will forgo their bonuses this year as a result of the fines, two months after his 12 million pound pay package for last year earned scorn from shareholders and lawmakers. After taking over as CEO in 2011, Diamond vowed to boost Barclays’ return on equity, a profitability measure, to 13 percent, about double last year’s 6.6 percent ratio.

‘Take Responsibility’
Barclays slipped 0.1 percent to 165.4 pence at 10:21 a.m. in London today, valuing the lender at 20.2 billion pounds. After yesterday’s plunge, Barclays is now this year’s worst performer in the five-member FTSE 350 banks index, with a 5.5 percent decline.

“People have to take responsibility for the actions and show how they’re going to be accountable,” British Prime Minister David Cameron said in Brussels yesterday. “It’s very important that goes all the way to the top of the organization.”

Barclays declined to comment further. A voicemail left for Chairman Marcus Agius wasn’t returned.

Diamond has agreed to appear at a meeting of U.K. lawmakers to highlight “what we have done and are doing to put things right,” he said in a letter yesterday to Andrew Tyrie, chairman of Parliament’s cross-party Treasury Committee.

“I appreciate that the nature of the settlements disclosed yesterday raises many questions, and I welcome the opportunity to provide answers,” Diamond wrote.

Top Executives
Royal Bank of Scotland Group Plc, UBS AG (UBSN), ICAP Plc (IAP), Lloyds Banking Group Plc (LLOY), Citigroup and Deutsche Bank are all being investigated in their role in how the London interbank offered rate is set. Though all of the banks’ share prices declined yesterday, none approached Barclays’ plunge.

“If Bob Diamond does go, what does that mean for Anshu Jain, Stephen Hester? What happens to Vikram Pandit? How ridiculous do you want to make this?” said Christopher Wheeler, a London-based analyst at Mediobanca SpA, referring to top executives of Deutsche Bank, RBS and Citigroup respectively.

A total of 18 banks are surveyed as part of the process of determining Libor and related rates. Libor, a benchmark for more than $350 trillion of financial products globally, is set by averaging out submissions in a poll of banks, who are asked how much it would cost them to borrow from each other for different periods of time, from overnight to one year. ‘Complete Answer’
In 2008, in the midst of the financial crisis, “a member of senior management” instructed Barclays’ Libor staff to lower their submissions to make them match other banks and dispel concern about the lender’s health, the U.S. Commodity Futures Trading Commission said in a settlement document.

Matthew Oakeshott, a member of the U.K. ruling coalition’s Liberal Democrat party who sits in Parliament’s upper House of Lords, said Diamond should resign. Paul Myners, who also sits in the House of Lords for the opposition Labour Party, said Barclays executives should face criminal charges.

“What did he know and when did he know it?” Chancellor of the Exchequer George Osborne said of Diamond, speaking in Parliament in London yesterday. Osborne also said prosecutors at the Serious Fraud Office are now investigating the case.

Diamond had already scrapped in February a timeline of reaching his profitability target by 2013. Barclays was the last British consumer bank to have kept such a target as Europe’s debt crisis and tougher regulation eroded earnings.

Succession Concern
“It does question the position of the top people there, but it’s difficult to see merely changing the boss would be the complete answer,” said Jane Coffey, who oversees 12 billion pounds as head of equities at Royal London Asset Management Ltd., which holds Barclays in its index funds. “The regulatory environment will become a lot tougher for them. That will ensure they will not be making the same money they were before.”

It’s also unclear who could replace Diamond, according to Chirantan Barua, an analyst at Sanford Bernstein Research in London. Chief Operating Officer Jerry del Missier, Finance Director Chris Lucas and corporate and investment banking chief Rich Ricci are also forgoing bonuses this year due to the fines.

“The simple fact is that there is no internal candidate” with the “industry experience, much-needed political credibility and expertise in running a large capital markets business,” Barua wrote in a note yesterday. “This will remain a driver of volatility for the stock as long as the pressure from political parties remains.”

In the Libor investigation, the U.K. Financial Services Authority said derivatives traders requested false submissions from their colleagues as they were “motivated by profit and sought to benefit Barclays’ trading positions.”

Criminal Charges
In another blow to Barclays today, the lender will join RBS, Lloyds and HSBC Holdings Plc in compensating small and medium-sized businesses improperly sold interest-rate derivatives following a probe by the FSA. The regulator, which didn’t say how much would be paid out, FSA found “serious failings” by the banks dating back to 2001.

Calls for Diamond to step down may not abate, especially if lawsuits follow the regulatory penalties and possible criminal charges.

“Pressure for change could continue to mount as industry observers digest the released evidence,” Goldman Sachs Group Inc. analysts said in a note to clients. “We would expect any changes to the senior management team at Barclays to be negatively taken by the market.”

Diamond told analysts led by Chris Manners of Morgan Stanley he has no plans to step down in a meeting yesterday. Manners and Huw Van Steenis met Diamond to talk about the impact of the publication of the bank’s Libor settlement, the analysts wrote in a note to clients today.

“The CEO says he does not intend to stand down,” said the note. “Further, the CEO was appointed 18 months ago with the full approval of the FSA in knowledge of this investigation.”

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net

[REO 54]

"Here’s our question.

If the decision was wrong, who made it? Despite having “co-operated fully with the authorities” you seem not to have told them. “The origin of these instructions is unclear,” the FSA concluded.

Meanwhile the FT’s editorial has called for Bob Diamond to go."

more at link....http://ftalphaville.ft.com/blog/2012...-decision-bob/

[southfork]

Why is this any different to what the Feds are doing ????? A thief is a thief.

[REO 54]

Barclays chairman quits over rate-fixing scandal.....


(Reuters) - Barclays Plc sacrificed its chairman Marcus Agius over an interest rate rigging scandal that has dealt "a devastating blow" to the bank's reputation, apparently seeking to defuse calls for chief executive Bob Diamond to go.

Agius - who said "the buck stops with me" - is the first major scalp from the scandal, which is likely to involve more banks and could also embarrass regulatory authorities.

But Agius's departure from Britain's third-largest bank did not take the heat off Diamond, who was running Barclays' investment banking arm when the interest rate manipulation took place.

"The buck in Barclays stops with Bob Diamond, and it is Bob Diamond who must accept responsibility," said John Mann, a Labor politician who is part of a panel of lawmakers who will grill Diamond on Wednesday, and Agius on Thursday.

"He (Diamond) must resign. He's got to go. There is no role for people like him if banking is to be trusted again in this country and if British banking is to restore its tarnished reputation in the world, which of course is of great importance to our economy," Mann said on Sky News.

Barclays has admitted that some of its traders attempted to manipulate the London Interbank Offered Rate (Libor), which is used worldwide as a benchmark for prices on about $350 trillion of derivatives and other financial products.

Prime Minister David Cameron has called the scandal "extremely serious" and said management had "some big questions to answer". Authorities also ordered a review into the working of Libor, a key lending rate between banks.

The Barclays affair comes at a time when banks in Britain - already under fire for their role in the financial crisis - are facing a new wave of public outrage.

A technology problem at RBS shut millions of customers out of their accounts last month, and evidence has emerged showing banks mis-sold financial products to small businesses.

FAR AND WIDE

Fined $453 million by U.S. and British authorities, Barclays is the first bank to settle in an investigation which is looking at more than a dozen other banks, including Citigroup, HSBC, UBS and RBS.

"Barclays has become the poster child for this because they have been the first to be assessed by the regulators," Euan Stirling of Standard Life Investments, which holds some 2 percent in Barclays, said on BBC radio.

"I think this is going to spread far and wide through the industry," Stirling said.

Smaller shareholders were more robust in their demands for Diamond to take responsibility.

"I still think it is going to be hard for Bob Diamond to keep his job. I don't think he has built up enough shareholder goodwill in the past to be able to ride this one out," said a top-25 investor in the bank, who asked not to be named.

Barclays shares were up 4 percent at 1159 GMT, outperforming a 2.2 percent rise by the European bank index.

The exit of Agius was not seen as a big blow, analysts said, and a 17 percent crash in the past three trading days looked excessive in light of the hit the bank is likely to suffer.

CONVERSATION WITH THE BOE

Lawmakers this week are likely to quiz Agius and Diamond on what the Bank of England (BoE) and other regulators knew about the rate-rigging at a time that unsecured interbank lending had virtually dried up during the crisis.

The hearings could prove embarrassing for the central bank, after sources told Reuters a conversation held in October 2008 cited in documents released by U.S. authorities last week was between Diamond and BoE Deputy Governor Paul Tucker.

Some people at Barclays mistakenly believed they had been granted permission to submit artificially low rates for Libor after the conversation, the documents showed.

"It is nonsense to suggest that the Bank of England was aware of any impropriety in the setting of LIBOR," a BoE spokesman said. "If we had been aware of attempts to manipulate LIBOR we would have treated them very seriously."

Barclays has admitted it submitted artificially low estimates of its borrowing costs from late 2007 to May 2009 because it thought rivals were doing the same, and higher submissions would make it appear to be in trouble.

Barclays employees expressed their concern that Libor rates were being set too low to the British Bankers' Association - the UK banking lobby group that is also responsible for setting Libor - the Financial Services Authority, the BoE and the Federal Reserve Bank of New York between November 2007 and October 2008, a U.S. Department of Justice document said.

However, the employees did not provide "full and accurate information" to the authorities, the document said.

Barclays said it would launch an audit of its business practices, led by Michael Rake, its senior independent director, who will move up to deputy chairman.

Rake is seen as a strong candidate to become Barclays' next chairman - especially as he was not appointed to lead the search - although he is already chairman of BT Group and easyJet, and may have to give up one or both of those.

The audit will undertake "a root and branch review of all of the past practices that have been revealed as flawed" and assess implications for its practices and culture. Diamond said its recommendations would be implemented in full.

Agius said Barclays had been "well served by an excellent executive team", first led by John Varley, and now by Diamond.

Cambridge-educated Agius became chairman at the start of 2007 after more than 30 years as an investment banker and then chairman at Lazard. His wife Kate, a successful art dealer, comes from the Rothschild banking dynasty.

Wealth-X, the Singapore-headquartered research house which tracks the wealth of the world's richest people, estimates that Agius has a net worth of at least $35 million.

"Last week's events - evidencing as they do unacceptable standards of behavior within the bank - have dealt a devastating blow to Barclays reputation," Agius said.

"I am truly sorry that our customers, clients, employees and shareholders have been let down," he said.

Agius also relinquished his position as chairman of the BBA, a role that is drawn from the senior ranks from one of the banks. The BBA said its board would meet soon and make an announcement about a successor in due course.

(Additional reporting by Tim Castle, Additional writing by Douwe Miedema,; Editing by Anna Willard, Will Waterman and Giles Elgood)

http://www.reuters.com/article/2012/...8600GD20120702

[REO 54]

Diamond Quits as Pressure Mounts on Barclays Over Libor......

Robert Diamond, the architect of Barclays Plc (BARC)’s investment banking expansion, stepped down as chief executive officer, succumbing to political pressure after the bank admitted to rigging global interest rates.

Diamond, 60, will resign immediately, the London-based bank said in a statement today. Diamond became CEO of Barclays on Jan. 1, 2011 after joining the bank in 1996. Marcus Agius, who said yesterday he planned to step down, will become full- time chairman and lead the search for a new CEO.

Barclays was hit by a record 290 million-pound ($455 million) fine last month for rigging the benchmark. Diamond had yesterday defied pressure to quit, pledging to implement the findings of a review into how the bank sets the London interbank offered rate. He and Agius are so far the most senior bankers to announce their departures following the probes.

“Diamond’s position had clearly become untenable,” Gary Greenwood, a banking analyst at Shore Capital, said by e-mail. “While the company says that it will consider internal and external candidates to fill the role of CEO, we believe that it is of paramount importance that an external appointment is made in order to clean up the image of the company.”

The stock rose 1.8 percent to 171.40 pence as of 8:25 a.m. in London trading, giving the company a market value of about 21 billion pounds. The shares plunged 16 percent on June 28, when the Libor fines were announced.

‘Very Personal’
“There comes a point in time when the board says enough is enough and it became very personal in terms of the criticism,” said Christopher Wheeler, a London-based banking analyst at Mediobanca SpA. “It allows the bank to draw a line. The priority now is to find an appropriate chief executive who has not been affected by all this.”

Diamond stepped down a day after the government announced a parliamentary inquiry into the U.K. banking industry. He is due to be questioned by British lawmakers on the Treasury Select Committee tomorrow.

“It’s the right decision for Barclays,” Chancellor of the Exchequer George Osborne told BBC Radio 4 today. “I hope it’s the first step towards a new culture of responsibility in British banking.”

U.K. and U.S. regulators found Barclays “systematically” attempted to rig the London and euro interbank offered rates for profit. Libor, which is determined by 18 banks’ daily estimates of how much it would cost them to borrow from one another for different time frames and in different currencies, is the benchmark for more than $360 trillion of securities, including mortgages, student loans and swaps.

‘Deeply Disappointed’
“I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth,” Diamond said in the statement.

Diamond joined Barclays in 1996 and ran the London-based bank’s securities unit when the Libor manipulation occurred. He lost the contest for the CEO post to John Varley in 2003 and became president of the bank in 2005. He stayed, and by 2007, his Barclays Capital unit accounted for 31 percent of pretax profit. Varley stepped down in 2010, clearing the way for Diamond to replace him.

Diamond became the public face of both the company and the industry, being branded the “unacceptable face of banking” by then-Business Secretary Peter Mandelson in 2010 over his compensation. His 12 million-pound remuneration, including a 5.75 million-pound payment toward his personal tax bill last year, made him Britain’s top-paid bank CEO. In January 2011 he told Parliamentarians that the time for “remorse and apology” for banks needed to be over, prompting political outcry.

PPI, Swaps
His tenure as CEO has been marred by disputes with regulators, some of which he inherited from his predecessors: the first was over the mis-selling of payment-protection insurance to customers, the second over tax-avoidance plans the Treasury described as “abusive,” and the third over improper sales of derivatives to customers. At the same time, Diamond regularly called on banks to be more “effective citizens.”

His departure may stoke speculation the lender may divide its consumer and investment banking operations.

“The problem is the bank is so big,” said John Smith, a senior fund manager at Brown Shipley & Co., which manages 2.3 billion pounds including Barclays shares. “It’s getting beyond making money for themselves. You’re taking risks with the U.K. economy, people’s savings, and not just shareholders’ capital.”

To contact the reporters on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net; Liam Vaughan in London at lvaughan6@bloomberg.net.

http://www.bloomberg.com/news/2012-0...g-fine-1-.html


...from the comment section:

"SherWat
This still leaves Barclays at risk from lawsuits from those who received too little under an interest rate swap (because Libor should have been higher).
Moreover, that risk is _not_ offset by those who should have paid Barclay's more, because those counterparties were not parties to the fraud.

The mismatch could be very large; for the industry as a whole, interest rate swaps are about one-half of a several hundred trillion dollar gross market.

It is probably not smart to be a bank shareholder while these issues are outstanding...these are equity wipeout numbers."

[dacrunch]

repost from Max Keiser thread:

SUCCESS!!!!! BOB DIAMOND HAS RESIGNED. Someone should do Bob a favor and knock his teeth out to prepare him for prison and his new ‘husband’

(teaser)

It’s escalating. Following the resignation of Barclays’ Chairman this morning, the government announced a twin probe into the Libor system and banking standards; and Bob Diamond (Barclays CEO) is threatening, according to the FT, to reveal potentially embarrassing details about Barclays’ dealing with regulators

===========

Keiser Report: Big guy 'scandals' vs small fry 'crimes' (E309)

In this episode, Max Keiser and co-host, Stacy Herbert, discuss 'scandals' for the big guys, 'crimes' for the small fry and they also examine, the worst businessman of the century.

In the second half of the show Max talks to journalist and blogger, Teri Buhl of Teribuhl.com, about JP Morgan's $9 billion problem and the information about fraud that the SEC is currently sitting on.

============

John Aziz of Azizonomics: “If the LIBOR rate was under manipulation in 2008, is it not possible that the inter-bank lending rate spike (and resultant credit freeze) was at least partly a product of manipulation by the banking cartel?”

Big Banks Have Criminally Conspired Since 2005 to Rig $800 Trillion Dollar Market

============

[REO 54]

Taibbi, Spitzer, and Kelleher On LIBOR - But Even They Don't Understand the Bigger Picture
Jesse's Café Américain


Bleed, bleed, poor country!
Great Tyranny! lay thou thy basis sure,
For goodness dares not check thee!"

William Shakespeare, Macbeth. Act IV. Sc. 3.


The LIBOR scandal is shaking the remaining confidence that people have in the financial system.

It is the equivalent to rigging the US benchmark interest rates with advance insider knowledge to benefit the banks' personal accounts to the loss of everyone else.

Oh wait, they already do that, don't they?

Bear in mind, the Federal Reserve is a private institution, owned and managed by the Banks. The government itself uses the bankers to achieve their own policy ends, both domestically and abroad, and turns a blind eye to their more brazen extracurricular privateering for their own accounts out of professional courtesy, and blackmail.

What is equally outrageous is the long term manipulation of gold and silver, which are also foundational benchmarks of the monetary system.

The manipulation in the metals has been exposed for some time now, and is virtually in plain sight.

The same parties involved in LIBOR are involved in manipulation across multiple markets, actively mispricing risk and misallocating capital to serve the greed of the privileged few.

And the pity is so few people get it. But they will. As I had forecast, this is the year of revelations.

When it comes out they will say, 'we did it for the sake of the system.'

And don't be a sap, because after all, everybody knows.

videos at link....http://www.silverbearcafe.com/private/07.12/libor.html

[REO 54]

The Worst Banking Scandal Yet?


The scandal over the manipulation of Libor has the potential to become one of the most costly and consequential in the history of banking. If the financial institutions involved want to prevent it from overwhelming their businesses and damaging the broader economy, they’ll have to act fast.

Investigators in the U.S., Canada, Europe and Asia are piecing together a breathtaking portrait of avarice and deceit. To hide their institutions’ problems during the financial crisis, or often to boost their traders’ profits, bankers knowingly submitted false data for the calculation of the London Interbank Offered Rate, a benchmark interest rate that influences the value of hundreds of trillions of dollars in financial contracts around the world, including floating-rate mortgages, corporate loans and interest-rate swaps.

The roughly $450 million in fines paid by Barclays Plc, the first bank to fess up, is only the beginning. Regulators can and should hit more banks with large fines to prevent a repeat. More important, criminal charges for the first time could threaten a significant number of bankers and traders with jail terms for their actions during the financial crisis -- a much needed comeuppance that could help reset the industry’s moral compass.

It is the lawsuits, though, that have the potential to turn a necessary catharsis into a systemic disaster. Plaintiffs ranging from investment firms to municipal governments, many of which bought bonds or entered into contracts that provided payments tied to Libor, are demanding compensation from banks for intentionally pushing down the benchmark. Attempts by traders to rig Libor on specific days, portrayed in detail in the Barclays case, will undoubtedly elicit more legal actions.

Estimates of payments related to lawsuits are currently in the billions or tens of billions of dollars. The full scope of possible litigation, though, won’t be known until the details of civil and criminal investigations emerge.

To get a sense of magnitude, consider this: If Libor was understated by an average of only 0.1 percentage point for a year, the discrepancy on the roughly $300 trillion in interest- rate swaps outstanding at the time would add up to $300 billion. That’s about a fifth of the aggregate capital of the 16 banks whose reports were used to calculate Libor in 2008. Much of that amount would not be actionable, but it also doesn’t account for other types of financial contracts or potential punitive damages.

It’s in no one’s interest if the prospect of decades of litigation, and prolonged uncertainty about the ultimate cost, cripples the banking system. It’s certainly the last thing a struggling global economy needs. Bank executives, regulators and prosecutors should be thinking now about how to come clean quickly, compensate the victims and move on.

The fund set up by BP Plc to pay claims related to the 2010 Deepwater Horizon oil spill offers one possible template. Banks could pool their resources into a global Libor victims’ compensation fund, appoint an independent administrator and create a transparent formula to calculate damages. Doing so might persuade angry clients to settle rather than pursue litigation that would serve mainly to enrich armies of lawyers.

Such a move would require a lot of cooperation and candor among the banks. For one, they would have to come up with an authoritative estimate of how much Libor was skewed as a result of their misreporting. Beyond that, they would have to decide what share of the payments each bank should bear. One bank -- Barclays is a prime candidate -- might have to take the lead in setting up the fund, as BP did after the oil spill, and press the others to pay their share later.

Governments can expedite the process. By quickly bringing and settling criminal charges against the financial institutions (as opposed to charges against the individuals who worked in those institutions), they would remove one obstacle preventing banks from admitting wrongdoing.

The Libor scandal offers a sad illustration of the moral bankruptcy that has infected some corners of finance. If the response fails to demonstrate a clear break from the past, the repercussions could again inflict a lot of pain on millions of innocent people. This time, the financial sector has little goodwill to spare.

Read more opinion online from Bloomberg View. Subscribe to receive a daily e-mail highlighting new View editorials, columns and op-ed articles.

http://www.bloomberg.com/news/2012-0...ndal-yet-.html

[REO 54]

Exclusive: Libor scandal forces Barclays from UAE rate panel - sources


(Reuters) - British bank Barclays plans to pull out of the rate-setting panel for interbank lending in the United Arab Emirates because of its involvement in the Libor scandal in Britain, three industry sources told Reuters on Sunday.

Barclays belongs to a panel of 12 banks that quote indicative interbank lending rates in UAE dirhams. The quotes are averaged to arrive at a daily range of Emirates Interbank Offered Rates (Eibor), which are used to price financial instruments in the Gulf's top financial centre.

"Barclays has indicated to the UAE central bank that it wants to quit the panel, and the central bank has called for a meeting on Tuesday to discuss who will replace Barclays," a source familiar with the matter said, declining to be named because a public announcement has not yet been made.

A Barclays spokesman was not immediately available to comment. UAE central bank treasury officials declined to comment.

Late last month, Barclays agreed with U.S. and British regulators to pay $453 million in fines for attempting to manipulate the London Interbank Offered Rate through its submissions to the Libor panel. There has been no suggestion that it tried to manipulate Eibor.

BALANCE

Barclays has a wide range of operations including corporate and personal banking in the oil-rich UAE, which is the second-biggest Arab economy. Dubai, one of the UAE's seven emirates, provides financial services to much of the Gulf because of its open markets and broad international links.

It is unclear which bank will replace Barclays on the UAE panel, a second source said. The UAE central bank would like to retain the current balance of the panel between foreign and local banks but there aren't many obvious contenders, he added.

"Apart from those already on the panel, most foreign banks have just wholesale operations or only have a very small presence here in the UAE," he said.

In addition to Barclays, Citigroup, HSBC and Standard Chartered sit on the Eibor rate-setting panel, along with eight local banks


http://www.reuters.com/article/2012/...86E03N20120715