03.07.2012
By Simon Miller
Barclays has suggested that the Bank of England (BoE) may have called for it to lower its Libor rate submissions.
As part of a submission prior to the appearance of former chief executive Bob Diamond at the Treasury Select Committee, an email from Diamond explained that BoE deputy governor Paul Tucker had been asked by "senior" Whitehall officials as to why Barclays' rates appeared higher than other banks in 2008. Diamond said that after explaining why, Tucker suggested that did not always have to be the case.
During the financial crisis of 2008, Barclays had noted that its US Dollar Libor submissions were significantly higher than other panel members. Indeed, the bank said that in October 2008 its US Dollar Libor submissions for the 3-month maturity were the highest or next highest of the panel on every single day of the month and therefore excluded from the calculation of Libor.
"Barclays did not understand why other banks were consistently posting lower submissions; Barclays firmly believed that the other panel members were not, in fact, funding at a lower cost than Barclays, and we were disappointed that no effective action was taken, notwithstanding our having raised these issues with various Authorities during the whole financial crisis period," said the bank.
According to the submission, Diamond sent an email to the then chief executive John Varley, saying that he had received a call from Bank of England deputy Paul Tucker that a number of senior figures within Whitehall had asked why Barclays was always at the top end of the pricing.
Diamond said he asked Tucker to “relay the reality, that not all banks were providing quotes at the levels that represented real transactions, his response ‘oh that would be worse’”.
According to the note, Tucker said that the level of calls from Whitehall were senior and that “while he was certain [Barclays] did not need advice, that it did not always need to be the case that [Barclays] appeared as high as we have recently”.
The submission also described the subsequent negative publicity this week as "ironic" after it became the first bank to be fined for Libor manipulation.
The bank noted that it had invested nearly £100m in its own internal investigation of the Libor actions and said that each legal authority had recorded its "exceptional level of co-operation".
It added that the US Justice Department had described its actions as "extraordinary and extensive, in terms of the quality and types of information provided" and "the nature and value of Barclays cooperation has exceeded what other entities have provided in the course of this investigation".
As a result of this cooperation, Barclays became the first bank to reach resolution with regulators.
"It is ironic that there has been such an intense focus on Barclays alone, caused by our being first to settle in the midst of an industry-wide, global investigation," the bank said.
Bob Diamond will appear before the Committee tomorrow at 2pm adn the full submission can be read here.
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