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Prime
minister David Cameron has said that Barclays Bank management has
"serious questions" to answer over how it manipulated banking lending
rates.
Barclays was fined £290m ($450m) after an investigation into
claims that several banks manipulated the Libor rate at which they lend
to each other.
The comments came as former Barclays boss Martin Taylor said the bank has engaged in "systematic dishonesty".
Barclays has said its actions "fell well short of standards".
Other banks are still being investigated by UK and US regulators about their role in the affair.
Mr Cameron, speaking during a visit to Todmorden, West
Yorkshire, said: "I think the whole management team have got some
serious questions to answer. Let them answer those questions first.
"Who was responsible? Who was going to take responsibility? How are they being held accountable?"
Labour party leader, Ed Miliband, said: "This cannot be about a slap on the wrist."
"The people that have done the wrong thing in this case
should face the full force of the law... including criminal
prosecutions."
Regulators say that Barclays
manipulated interest rates at which banks loan to each other to benefit
their traders and financial status.
Mr Taylor said that Barclays' deception looks like a deliberate strategy as it had been going on for years.
Tracey McDermott, director of enforcement at the FSA, which
imposed fines alongside the US financial regulator, told the BBC: "We
have a number of investigations that are ongoing.
"Obviously we need to look at each case on its own particular
facts but the initial indications are that Barclays was not the only
firm that was involved in this."
The US Department of Justice also said criminal
investigations into "other financial institutions and individuals" were
ongoing.
Other big names believed to be under investigation include
Citigroup, JP Morgan, Deutsche Bank, HSBC and Royal Bank of Scotland.
Lord Myners: This is the most corrosive behaviour I have seen in a major UK financial institution in my career
The scandal is putting pressure on Mr Diamond.
Mr Taylor, who was chief executive of Barclays from 1994 to
1998, said: "It's hard to believe that a policy which seems to be so
systematic was not known by people at or very near the top of the bank."
Former City minister Lord Myners told the BBC that the people at the top should take responsibility.
The Liberal Democrat peer, Lord Oakeshott, said that if Mr Diamond had any shame, he would resign.
Barclays has said its actions "fell well short of standards".
In response, chief executive Bob Diamond and three other top executives at the bank are to give up their bonuses this year.
Investigators say that Barclays' traders lied to make the
bank look more secure during the financial crisis and, sometimes -
working with traders at other banks - to make a profit.
Mortgage deals
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Analysis
Robert Peston Business editor
Barclays has admitted that a group of traders lied about what it was costing the bank to borrow.
Now, why does this matter?
It matters because lots and lots of deals involving clients
of Barclays used the interest rate into which Barclays was feeding this
information, about its own borrowing costs, to determine the profit and
loss on their own deals.
It's quite hard to think of behaviour by a bank as shocking
as this: not telling the truth about what it is costing you to borrow,
that then becomes a benchmark for pricing other deals.
The statement from the US regulator, which levied a big chunk
of the fine, talks about how Barclays was working with other banks to
try to fix this interest rate.
This of course implies that Barclays is simply the first bank
to settle and we will see fines and punishments against some of the
other big banks of the world.
Barclays' misconduct relates to
the daily setting of the London Interbank Offered Rate (Libor) and the
Euro Interbank Offered Rate (Euribor).
These are two of the most important interest rates in the
global financial markets and directly influence the value of trillions
of dollars of financial deals between banks and other institutions.
They can also affect lending rates to the public, for instance with some mortgage deals.
It is not yet clear whether Barclays staff actually succeeded
in manipulating the interest rates to the bank's advantage and
therefore whether it had any impact on borrowers.
While the FSA said only that the Barclays employees had
attempted to do so, the US Department of Justice said that on some
occasions they did affect the Libor and Euribor rates.
Former City minister Lord Myners told the BBC that the people
at the top should take responsibility for "a complete cultural
failure".
He said the behaviour of Barclays staff was the worst he had seen.
"This is the most corrosive failure of moral behaviour I have seen in a major UK financial institution in my career," he said.
"I think fines and public criticism will not stop these
behaviours. These behaviours will not stop until the people perpetrating
it or responsible for overseeing them face the prospect of criminal
charges and the prospect of going to jail."
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“Start Quote
The banks may be open to litigation if they are sued by their customers for being ripped off”
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Neil MacKinnon
VTB Capital
- Libor rates: Who might have lost?
The former Liberal Democrat Treasury spokesman, Lord Oakeshott said: "If Bob Diamond had a scintilla of shame he would resign."
"If Barclays' board had an inch of backbone between them they would sack him," he said.
Andrew Tyrie, chairman of the Commons treasury committee, said it would summon Mr Diamond to account for what had happened.
"Banks were clearly acting in concert. I fear it's not going
to be the end of the story, that we are going to find that other banks
have been involved," he said.
'Accepted culture'
The fine imposed on Barclays is part of an international
investigation into the setting of interbank rates between 2005 and 2009.
Each day the British Bankers' Association (BBA) and the
European Banking Association publish the the Libor and Euribor rates by
taking an average of the estimated rates submitted to them by leading
banks.
Tracey McDermott, of the FSA, says the misconduct is some of the most serious the regulator has ever seen
Between 2005 and 2008, the Barclays
staff who submitted estimates of their own interbank lending rates were
frequently lobbied by its derivatives traders to put in figures which
would benefit their trading positions, in order to produce a profit for
the bank.
And between 2007 and 2009, during the height of the banking
crisis, the staff put in artificially low figures, to avoid the
suspicion that Barclays was under financial stress and thus having to
borrow at noticeably higher rates than its competitors.
The FSA pointed out that Barclays traders were quite open
about their routine attempts to lobby their colleagues who submitted the
bank's estimate of its borrowing costs to the BBA.
Continue reading the main story
“Start Quote
I owe you big time... I'm opening a bottle of Bollinger”
End Quote
Exchange involving Barclays staff
It was particularly concerned because it appeared to be "accepted culture" among some staff.
"Requests to Barclays' submitters were made verbally and a
large amount of email and instant message evidence consisting of
derivatives traders' requests also exists," the FSA said.
In one instance, a trader recounted a conversation in which he had "begged" the submitter to put in a lower Libor figure.
"I'm like, dude, you're killing us," he said. His manager replied, "just tell him to... put it low".
In turn, the staff submitting the data would respond to the traders' requests.
"For you…anything," said one. "Done… for you big boy," said another.
And: "I owe you big time... I'm opening a bottle of Bollinger."