With Bob Diamond still reeling from his scuffles with members of the Treasury Select Committee earlier this week, the City is stuffed full of bankers who are not sure if their head will be on the block next. And for those who are guilty of getting involved with Libor rate-fixing activities, it could be about to get pretty nasty.
The Serious Fraud Office today released a short statement, saying: ‘The SFO Director David Green QC has today decided formally to accept the Libor matter for investigation.’ This was actually the entirety of the office’s press release, and the mysterious lack of other information (i.e. dates, times, parameters of the investigation) should have a few people slightly panicked in the Square Mile.
Of course, the scandal kicked off after it was found that traders at Barclays had spent years illegally manipulating the interest rates at which banks commercially lend to each other, in order to improve their trading position artificially. US authorities and the FSA collectively fined the bank £290m for the practice. Bob Diamond resigned from the position of CEO within days of the news, as did the COO Jerry Missier. The chairman, Marcus Agius will remain in post until a new CEO is found, when he will step down to be replaced also.
The scandal is proving something of a cataclysm for the wider banking industry, as the Prime Minister has now launched a parliamentary inquiry into financial institutions, and the baying political mobs on either side of the House of Commons are stoking the fire of public interest in the situation by using it to score political points against each other. Whether or not any serious punishments will be doled out as a result of the SFO’s involvement remains to be seen.
But, in a tactic we’ve heard before (and which other banks will no doubt parrot), Bob Diamond insists no-one in any position of responsibility knew that the rate fixing was going on, and that the behaviour was confined to a small group of 14 ‘rogue’ traders. Must have been taking lessons from James Murdoch in reputational damage limitation…
We will watch with interest to see if any bankers do get their comeuppance, but if the track record of the SFO is anything to go by, we shouldn’t really be holding our breath…
Check out Chris Blackhurst's feature on the SFO from MT's archive, click here