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Banks Question Barclays Chair’s BBA Role

(c) Sky News 2012

Senior (Xetra: 852271 - news) executives at major banks are starting to question the viability of Marcus Agius, chairman of Barclays (LSE: BARC.L - news) , retaining his role at the helm of the industry’s trade body amid the political firestorm that has plunged it into crisis.

I have learnt that directors of a number of rival lenders believe that Agius’s position as chairman of the British Bankers’ Association (BBA) has become untenable in the aftermath of the £290m in fines levied on Barclays for rigging the benchmark inter-bank borrowing rate LIBOR.

Agius became BBA chairman in 2010 when his predecessor Stephen (now Lord) Green left HSBC (LSE: HSBA.L - news) to become the Coalition’s trade minister. He has chaired Barclays since 2007, and – potentially awkwardly for David Cameron, given the Prime Minister’s suggestion that Barclays’ management team has serious questions to answer over the LIBOR-fixing affair – is a Business Ambassador for UK Trade & Investment.

To be clear, the view that Agius might have to step down from the BBA is not a unanimous one; I’ve also spoken to board members at other UK banks who continue to support him in his role at the trade body.

That said, the fact that the BBA plays a key role in the operation of the LIBOR rate – which influences interest rates on everything from complex derivatives products to ordinary mortgages – has led some executives at rivals to say that Agius is now embroiled in a potential conflict of interest.

Allies of Barclays point to the fact that as many as 20 other banks are being investigated by UK and US regulators for similar market abuse offences to the ones which sparked the conflagration of criticism around Barclays this week.

However, one executive at a rival bank suggested that the City would not have its faith restored in the integrity of LIBOR unless Agius stepped down from the BBA. He suggested that the head of another lender who was not a bank director during the period when the manipulation of LIBOR rates took place (2005-08) would be a more credible incumbent.

Agius’s role at the BBA would be a redundant debating-point if he stepped down as chairman of Barclays, a scenario that some shareholders in the bank believe is increasingly likely as they attempt to shore up the position of Bob Diamond, its chief executive.

Barclays and the BBA were unavailable for comment.