Former Barclays executive insists Bob Diamond instructed him to cut Libor
Jerry del Missier told MPs he spoke directly to former chief executive before instructing staff to cut bank’s Libor submission
Jerry del Missier, a former top Barclays banker, revealed that he spoke directly to his former boss Bob Diamond before instructing staff to cut the bank’s submission to Libor.
He also revealed that the bank’s compliance department was informed that traders were going to attempt to manipulate the crucial interest rate.
In evidence to MPs following his resignation as chief operating officer of Barclays, Del Missier was adamant that Diamond instructed him to cut the Libor rate following a conversation with Paul Tucker, deputy governor of the Bank of England.
Del Missier said he passed on the instruction he received to reduce Libor submissions to the “head of the money market desk” – later named as Mark Dearlove. “It did not seem an inappropriate action given this was coming from the Bank of England,” said Del Missier. Asked if he was acting on an instruction from Diamond, Del Missier said: “Yes it was”.
He said that the money market desk had told compliance, then headed by Stephen Morse, about the decision to reduce the Libor submission.
The Financial Services Authority investigated Del Missier and did not bring a case against him when it fined the bank a fortnight ago for attempting to manipulate Libor. He told MPs that in September 2011 the FSA told him there would be no action against him. “I was cleared,” said Del Missier who was promoted to chief operating officer only last month after holding senior roles at the investment banking arm Barclays Capital.
Del Missier – who quit shortly after Diamond – said that Diamond spoke to him the day before he wrote a crucial memo – sent to the then-chief executive John Varley and copied to Del Missier – in which he outlined a conversation with Tucker which has caused confusion about whether the Bank of England was sanctioning Barclays to reduce its Libor submission.
Libor is set by a panel of banks – and a high submission might indicate a bank was in financial difficulty.
Diamond has insisted he did not instruct Del Missier to cut Libor and that he did not believe Tucker was telling him to cut the bank’s Libor submission. Tucker said the same when he appeared before MPs last week.
Andrew Tyrie, the MP who chairs the Treasury select committee, noted that the “lowballing” of Libor carried on until May 2009 – some seven months after Del Missier issued the instruction.
He was asked how he could have misinterpreted what Diamond said to him and replied: “I can only tell you what I clearly recall from the conversation.”
“What was communicated to me by Mr Diamond was that there was political pressure on the bank regarding Barclays’ health, and that we should get our Libor rates down,” said Del Missier, who said he was in “regular communication but not always daily” with Diamond.