LONDON (Reuters) - Barclays Chairman Marcus Agius faced a grilling by British lawmakers on Tuesday as part of a probe into the Libor interest rate rigging scandal.
Following are comments from Agius from the hearing in parliament’s Treasury Select Committee:
“I had a conversation with my board … who were not in a happy place as you can imagine. Just the non-executives, we had a telephonic board meeting, at which we discussed what had happened…. We concluded that we had no choice but to call for his resignation.”
“We explained what had happened ... he was utterly depressed as you can imagine. The conversation was not long. He asked for time to talk to his family, and we left confident that if he hadn’t already made the decision, that he would make the right decision.”
Question: Did you have any conversations about Mr. Diamond’s position with the governor of the Bank of England?
“Yes. We went to see him and we had a conversation, the two of us (Sir Michael Rake and Agius) with him, at which it was made very plain to us that Bob Diamond no longer enjoyed the support of his regulators.”
“I was notified first of the investigation and that was the first I heard of any of these practices - or the possibility of any of these practices - in April 2010.”
“It will look to us, and frankly it will look to everybody listening, like another example of a complete lack of candor to parliament by the chief executive of Barclays.”
“For many years the activities of the Libor market were seen to be low risk because the passage of the Libor rate was very constant, the spreads were very narrow, very little happened and secondly because of the way the Libor rate is struck the chances that anybody could manipulate the rate successfully was deemed to be very very low.”
“The solution we devised was that the four senior executive officers who were on the deck when these matters occurred should recognize their responsibilities by forgoing their bonuses.
“We hoped obviously that would be deemed proportionate. Evidently we were wrong because the public outcry afterwards was extraordinarily great.”
“So as we went into that weekend I was faced as Chairman with the dilemma that there was far greater reputational damage than we had anticipated, and certainly far greater than we had sought, that there was a requirement for some further action from the bank.”
“Banks and many other industries went into the financial crisis with a model of pay which was competitive as between the various different countries that they were operating in as a centre.
“As the situation has come off, we have tried very hard to manage compensation down, we have tried very hard to achieve a far better balance as between the shareholders and between the employers. But there’s a natural limit to how far we can go.
“If we reduce the payment of our people too fast, they leave, if we don’t go fast enough, our shareholders vote us out, we have to somehow strike that balance.
“I do believe that we have done as much as we could in the circumstances, and I think we have a long way to go, I’m completely sympathetic to shareholders.
“I think this is a very important letter and one we took very seriously. I have not had another letter similar to this.
“I don’t wish to be pedantic but I don’t regard this as damning. I regard this as a firm letter from our regulator. I think this is a very important letter and one we took very seriously. I have not had another letter similar to this.”
Question: What word would you like to try and summaries your relationship with the regulator? Strained? Difficult?
“Strained I think would be reasonable.”
“As the process was nearing its conclusion I thought it prudent to go and have a conversation face-to-face with Hector Sants. I said in effect it’s looking as if we are going to conclude that Bob Diamond is the person we should appoint as chief executive.
“This is not going to cause you any difficulties? His response was ‘Not only is that not going to cause any difficulties I can tell you now if it were I wouldn’t be happy with him working now in his present role.’”
“Bob Diamond has voluntarily decided to forgo any deferred consideration and deferred bonuses to which he otherwise would have been entitled to. The maximum amount would be 20 million pounds.”
“(Andrew Bailey) came to our board together with a colleague in February of this year (...) during the course of that session at Barclays Bank he said ‘We are satisfied with the tone at the top of Barclays’, particularly in respect of Bob Diamond and Chris Lucas.”
“The message we received, in strong terms, from the market, was that the one outcome the shareholders did not want to see was the removal of Bob Diamond (..) they believed in him as very effective chief executive.”
Reporting by UK bureau