Bank Has £3.7bn Wiped From Value Amid Scandal

Some £3.7bn has been wiped off the value of Barclays bank (NYSE: BCS-PA - news) in the wake of its massive £290m fine for the rate rigging scandal.

Its (Euronext: ALITS.NX - news) share price opened on Thursday at 196p and initially rose 1% on the FTSE 100 (Euronext: VFTSE.NX - news) but later plunged by 17% - finally closing at 15.5% down, at 165p.

The dramatic tumble came after it was clear that the apology from the bank's chief executive Bob Diamond had failed to placate angry investors and the industry's many critics.

Other major lenders also suffered drops in their value - 11.45% for RBS (LSE: RBS.L - news) and 3.9% for Lloyds - in a sign of worries about wider exposure to the international probe, which has also been examining actions at RBS and HSBC (LSE: HSBA.L - news) .

Chancellor George Osborne told MPs (BSE: MPSLTD.BO - news) in the Commons that the investigation had identified systemic failures in the system and it was a "shocking indictment" of the banking culture while Labour leader Ed Miliband called for a criminal inquiry.

It has been confirmed that Serious Fraud Office investigators are in talks with the Financial Services Authority (FSA) - raising the prospect of potential criminal charges and further fines totalling many billions of pounds across the sector.

Sandy Chen, banking analyst at Cenkos Securities (Berlin: CCE.BE - news) , said: "The cost of lawsuits related to the Libor rate scandal will likely dwarf the £290m fine imposed on Barclays (LSE: BARC.L - news) ."

Under pressure Mr Diamond, who was in charge of the so-called 'casino' part of Barclays at the time of the rate rigging, has also faced a demand to quit from the former Liberal Democrat Treasury spokesman, Lord Oakeshott.

He spoke out against the bank boss after the lender confirmed on Wednesday it had agreed to pay the penalty in return for settling claims that it used underhand tactics to try to rig lending rates between its banks and as a result, profit from its own trades.

Barclays allegedly gave false information about the interest rates it had to pay to borrow money so it could paint a better picture of its health to markets.

The bank was fined £59.5m - the largest imposed by the FSA - and also agreed payments to authorities in the US. The fine from the City watchdog would have been higher had Barclays not co-operated.

Mr Diamond on Wednesday apologised for the bank's actions and said he and three other executives would waive their bonuses for the current financial year.

He took a £2.7m cash bonus last year despite widespread criticism that his pay failed to reflect the struggling performance of the bank.

The FSA also disclosed on Wednesday that more banks could be caught up in the rigging scandal.