FSA claims it warned Barclays over Bob Diamond appointment in 2010

The Financial Services Authority has come forward saying it warned Barclays about Bob Diamond's future before he became CEO. Easy to say it now though...

by Michael Northcott
Last Updated: 19 Aug 2013

As the dust surrounding the Libor scandal settles, it is easy to forget just how angry everyone was with former Barclays CEO, Bob Diamond. After the Financial Services Authority (FSA) made clear that Diamond no longer had its support, he resigned, quickly followed by COO Jerry del Missier, and chairman Marcus Agius. But now the FSA is saying that it knew his future would be uncertain two years ago.

The regulator said that in meetings held in September 2010, it told Marcus Agius that the Libor investigation (which was already underway) could influence Diamond’s position in the bank. Unfortunately for the regulator, the decision had already been made, and Diamond took up his new post as CEO the following January. Letters from the time, published this week, were given to the Common’s Treasury Committee. We can’t help noticing though: it is rather convenient for the FSA that Diamond now no longer has a credible platform from which to mount his defence…

In the letters, FSA chief Hector Sants wrote, with some piety: ‘The FSA was fully aware that the ongoing investigation might come to conclusions which would be relevant to Mr Diamond’s suitability. However, at the time, since the investigation was not concluded, it would not have been appropriate to prejudge its outcome.’ Hmmm. It’s easy to say ‘we knew all along’ once everything’s out in the open, Sants.

Interestingly though, Sants does some very direct finger pointing at Barclays over the Libor issue. He added in the letter: ‘I would like to record that in that conversation, I made clear that our concerns about Barclays’ culture were not some generic observation but specific to Barclays, and asked that these concerns be communicated [to the top].’

In the end, Barclays was fined £290m for the Libor rigging scandal, and the investigation into several other banks is ongoing. We haven’t heard the last of it, and Hector Sants is obviously keen to exonerate the FSA while the scandal is in the eye of its storm…

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