Robert E Diamond Jr, the former chief executive of Barclays, will forgo deferred stock bonuses of up to $31 million, as the British bank looks to quell public anger over an interest rate-rigging scandal.
The bank’s chairman, Marcus Agius, told a British parliamentary committee on Tuesday that Diamond would still receive up to one year in salary and a cash payment worth a combined $3.1 million. Diamond, who resigned last week as Barclays battled public furor over its illegal actions, will “support the transition to the new chief executive as necessary,” the bank said on Monday.
In a statement on Tuesday, Agius said: “The board deeply regrets the circumstances that led to Bob resigning his positions at Barclays. Despite having no personal culpability, he recognises more than anyone the negative attention that they have generated and has taken characteristically strong action to address that. These circumstances do not detract in any way from the tremendous legacy that Bob has left at Barclays, and his actions are clear indications of his commitment to the institution to which he has contributed so much.”
During a tense parliamentary hearing on Tuesday, British politicians questioned the leadership of Diamond, and grilled, who has resigned from his post and will step down after a new chief executive has been found, why Barclays’ senior executives did not know about the manipulation of the London interbank offered rate, or Libor. Agius was repeatedly questioned about the overall culture within the bank.
“The culture at Barclays came from the top, it came from top executives,” said Andrew Tyrie, a British politician who heads the parliamentary committee that had called Agius to testify.
Politicians focused on a letter sent by Adair Turner, chairman of the Financial Services Authority, to Agius earlier this year that raised concerns about some of the bank’s recent practices, including an effort to avoid paying around $774 million in corporate taxes. “Barclays often seems to be seeking to gain advantage through the use of complex structures, or through regulatory approaches which are at the aggressive end of interpretation of the relevant rules and regulations,” Turner wrote in April.
Agius said that Turner’s letter had highlighted the bank’s “strained” relationship with the Financial Services Authority. “What that letter is saying is that we overdid it,” Agius told the committee.
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Barclays reached a $450-million settlement with American and British authorities at the end of June regarding actions by some of the firm’s traders and senior executives to manipulate the rate, which dictates what borrowers are charged for everything from mortgages to derivatives.
The British officials also queried whether Diamond had been completely forthcoming during his testimony to the same committee last week.
During his testimony, Diamond placed some of the blame for the rate manipulation scandal on regulators, whom he said had been told about the problems but had not moved to stop it.
Diamond had also said that the bank maintained a good relationship with the British regulator, and that he did not recall that the regulator had raised concerns about the bank’s activities or its internal culture.
“Would you say that Diamond lied to this committee?” David Ruffley, a British politician, asked Agius.
“I can’t comment on Diamond’s testimony,” the Barclays chairman replied.
Agius, who was told about the American and British investigations into Barclays’ Libor activities in April 2010, said the firm’s board did not make decisions involving the setting of the rate. Instead, Libor issues were left to lower-level executives, he testified.
When asked what it said about senior managers who did not question decisions to lower Libor submissions during the financial crisis, Agius responded that the bank handled many difficult situations after the collapse of Lehman Brothers in 2008.
“I think it reflects the extraordinary times,” he added.
Agius, who became Barclays’ chairman in 2007, was asked several times about the circumstances that led to Diamond’s resignation last week.
He told the committee that he and Michael Rake, one of the bank’s independent directors, had talked on July 2 to Mervyn A. King, the governor of the Bank of England, about the rate-manipulation scandal.
During the conversation, King told them that Diamond no longer had the support of the country’s regulator, the Financial Services Authority, according to Agius’s testimony. King said the final decision about Diamond’s future had to be made by Barclays’ board.
After the conversation with King, Agius held a conference call with the firm’s nonexecutive directors, during which it was decided to ask Diamond to resign.
Agius told the parliamentary committee that he then called King to inform him of the bank’s decision. Agius then visited Diamond at his house.
“I left confident that he would resign,” Agius said.