Yahoo Finance Diamond: I'm Sorry, Disappointed And Angry
Former Barclays boss Bob Diamond has told MPs (BSE: MPSLTD.BO - news) he only found out about rate fixing at the bank days before it was made public last week.
Mr Diamond, appearing before the Treasury Select Committee, said he felt "physically ill" when he read emails between traders about the manipulation, which included promises of Champagne for keeping the key rate low.
During a grilling lasting almost three hours, the multimillionaire insisted he had no knowledge of the so-called lowballing in October 2008 when the country was in the grip of the financial crisis.
However, he took ultimate responsibility and said he had finally decided to resign on Tuesday after realising it was the best way to help Barclays (LSE: BARC.L - news) restore its reputation.
He repeatedly defended the bank, which he said he loved, but told MPs: "I'm sorry. I'm disappointed and I'm so angry. There's no excuse. This was wrong and I'm not happy about it."
Opening with a staunch defence of the bank, he admitted it had faced "an unfortunate series of events" over the past week but declared: "History will judge Barclays as an incredible institution."
MPs on the committee repeatedly quizzed him about how much he knew about staff fiddling the key inter-bank lending rate, which affects the price of mortgages and loans, and were incredulous at his claim he knew nothing until last week.
He was also asked about the role played by the Bank of England after documents published by Barclays suggested the Bank had encouraged the lowering of the rate, known as Libor.
Mr Diamond said the Bank's deputy governor Paul Tucker relayed concerns from "senior figures within Whitehall" in 2008 that Barclays' Libor rate was too high.
He said: "Whitehall was told Barclays had the highest Libor. They would think we couldn't fund and must nationalise the bank."
The conversation with Mr Tucker came shortly before the bank secured funding with Abu Dhabi on October 31, implying the deal may not have completed had concerns over the bank's health spread.
Mr Diamond said there were 14 or 15 other banks, including nationalised lenders, who he knew had a weaker financial position than Barclays and were still submitting lower Libor rates.
He said the reference to figures in Whitehall referred to "officials in Government".
Outlining his interpretation of Mr Tucker's comments, he said: "He felt that our Libor rates, relevant to the other 15 posters, could be lower".
However, the ex-banker added: "I didn't feel it was an instruction."
Mr Diamond was accused of either being "complicit" in the manipulation or incompetent for failing to realise what was happening on his watch but he said he did not feel personally culpable.
"What I do feel is a strong sense of responsibility, a very strong sense that when we find mistakes, we recognise them, we are open about them," he told the committee.
He added: "I know how angry this can make others because it made me angry that we had this behaviour but I am also very proud of Barclays because they didn't worry about how this was going to look."
Mr Tucker has now also asked to appear before the committee as soon as possible to give his version of events.
The rate-fixing scandal has so far cost Mr Diamond, 60, and his right-hand man Jerry del Missier their jobs. They both resigned on Tuesday.
A day earlier, Mr Diamond had declared he had no intention of leaving the bank and that he would be taking responsibility for restoring its battered reputation.
Chairman Marcus Agius had resigned on Monday but after the chief executive stepped down, he was temporarily reinstated and will now oversee the search for Mr Diamond's successor.
Despite Labour pressure, the Government is still resisting calls for a judicial inquiry into the banking sector and wants a parliamentary probe instead.
Mr Cameron rejected claims at PMQs that he was ignoring the national interest by refusing a Leveson-style inquiry in the wake of the latest revelations about the industry.
