The Governor of the Bank of England and the head of the Financial Services Authority today told of their shock that Marcus Agius had resigned as chairman of Barclays over the Libor-rigging scandal rather than his chief executive, Bob Diamond.
Sir Mervyn King told MPs on the Treasury select committee today: “I made it clear that the regulator had concerns about the executive management at the bank. No one believed that the culture [at Barclays] was set by the chairman but by the chief executive.”
Lord Turner, chairman of the FSA, said: “I made it clear to Mr Agius that I was effectively asking him to decide ‘Is Bob Diamond holed below the water line?’ Was he the right man to head the substantive change in culture which was needed?”
Committee chairman Andrew Tyrie, suggested to Turner: “You were handing the chairman of Barclays a revolver and telling him to go and shoot his executive?”
Turner denied this: “No, I thought the most likely outcome was that Diamond would resign.”
Tyrie said: “Instead the chairman shot himself.”
Turner responded: “Yes. It was the honourable thing to do but not the most sensible thing to do in the circumstances and not the best result for shareholders.”
King revealed that when Agius decided on the Sunday to resign, the board asked him to stay on.
He said: “On the Sunday late afternoon, early evening I discovered that the (Barclays) chairman had resigned. I, first of all, wanted to find out whether Lord Turner or indeed the Chancellor had been involved in discussions that led up to that, and I discovered that all three of us in fact had learned from the BBC website of the resignation of the chairman, which I found rather odd.”
King added: “Marcus Agius had put any new chairman in an impossible position. He would either have to demand Diamond’s departure as a condition of his arrival or deal with any possibilities including criminal prosecution of the chief executive for months or years into the future.”
He then described his meeting with Agius and the senior independent director Sir Mike Rake on the Monday evening at the Bank of England which eventually led to Diamond’s departure later that night.
King said: “I made it very clear to the two of them I was not speaking for the Government... I wanted the chairman and senior independent director just to be very conscious of the concerns which the regulators had raised.”
