* Bank of England deputy governor Tucker to have his say
* Testimony could deepen political row over scandal
* Tucker may be next central bank governor
By Steve Slater
LONDON, July 8 (Reuters) - A row about how much top British politicians and officials knew about interest rate rigging will intensify on Monday as the man tipped to be the next Bank of England governor reveals what he told Barclays, the bank at the eye of the global storm.
Paul Tucker, deputy governor of the Bank of England, will appear before a panel of lawmakers asking key people what they knew about Barclays and other banks submitting inaccurate figures for Libor, a key interbank lending rate. He appears at 1530 GMT.
Earlier this month, Barclays was fined a record $450 million by U.S. and UK regulators for rigging Libor rates between 2005 and 2009, plunging the bank into crisis and sparking a furious row between politicians over who was to blame.
Tucker asked to appear before the panel to clarify his position after allegations over his role in the scandal. Barclays is among more than a dozen global banks under investigation by authorities in North America, Europe and Japan.
An internal email released by Barclays last week indicated that in October 2008, Tucker told Bob Diamond, then Barclays investment bank boss, that senior officials from Britain's then Labour government were questioning why its rates were so high.
This was at a time of turmoil in financial markets, and interbank lending markets were frozen. By submitting a lower estimate of its borrowing cost, a bank could appear stronger than it was.
Diamond, who quit as Barclays chief executive on Tuesday after sources said the BoE and financial regulator made clear they wanted him to go, last week told the Treasury Select Committee he did not take Tucker's comments as an instruction to lower its Libor rates.
But his next-in-command did, which Diamond said was a misunderstanding.
Diamond's internal note from October 2008 said: “Mr Tucker stated the levels of calls he was receiving from Whitehall were 'senior' and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently."
The Bank of England declined to comment on the note. Before it was released, a bank spokesman had said: "It is nonsense to suggest that the Bank of England was aware of any impropriety in the setting of Libor." Tucker has not commented himself.
Britain's Finance Minister George Osborne has said people close to former Labour Prime Minister Gordon Brown, rather than the Bank of England, were to blame. Labour deny Osborne's accusation of complicity.
Tucker's appearance before the Treasury Select Committee will be followed the next day by Marcus Agius, who quit as Barclays chairman on Monday to take the heat off Diamond, but then became executive chairman when Diamond left. Agius will stay until a replacement is found.
Adair Turner, chairman of the Financial Services Authority, could also be called to appear later in the week.
The scandal has sparked fierce criticism about Barclays' aggressive culture and risk-taking, and raised the threat of more political and regulatory intrusion in its operations.
It could force it to shrink or fully separate its investment bank arm, which critics have dubbed "casino banking", and its board is considering splitting in two, the Sunday Times said.
Barclays is the only bank to settle in what has been a long-running Libor investigation involving more than a dozen banks.
Britain's fraud squad took up the case on Friday, raising the prospect of criminal prosecutions, and sources told Reuters that Germany's markets regulator had launched a probe into Deutsche Bank.
The bank declined comment but referred to its quarterly report, which said it has received subpoenas and requests for information from U.S. and European authorities in connection with setting interbank rates.
Libor, or the London interbank offered rate, is compiled from estimates by large international banks of how much they believe they have to pay to borrow from each other. It is used for $550 trillion of interest rate derivatives contracts and influences rates on mortgages, student loans and credit cards.
The rates submitted by banks are compiled by Thomson Reuters , parent company of Reuters, on behalf of the British Bankers' Association.