The bank’s chair Marcus Agius revealed to the committee this morning that the fatal blow to Diamond’s career was dealt by Sir Mervyn King, who told the Barclays board that Diamond no longer commanded the confidence of the regulators. But there remain questions about the veracity of some of Diamond’s evidence, which centre around a letter from Financial Services Authority chairman Lord Turner to Agius. Turner’s letter, dated 10 April 2012 said:
‘I wished to bring to your attention our concerns about the cumulative impression created by a pattern of behaviour over the last few years in which Barclays often seems to be seeking to gain advantage through the use of complex structures, or through regulatory approaches which are at the aggressive end of interpretation of the relevant rules and regulations. Andrew Bailey also expressed these concerns at your board meeting on 9 February.’
It cites as one example:
‘The confusing and potentially misleading impression created by Barclays’ initial presentations of its position under the EBA stress tests, which appeared to be an attempt to leave FSA management with the impression that Barclays would be above the then intended 10% CTI threshold, whereas at the relevant date of September 2011, it was actually at 9.8%. In fact given that the eventually chosen ‘pass mark’ was 9%, this did not turn out to be of crucial importance. But it nevertheless left our senior management with an impression that Barclays were seeking to ‘spin’ its messages in an unhelpful fashion’.
But let’s just recall the exchange between Tyrie and Diamond last week:
Tyrie: Isn’t it a bit more specific than that, Mr Diamond? Didn’t they tell you that trust had broken down between the FSA and Barclays?
Diamond: I don’t recall that in the February meeting. Tyrie: Didn’t they tell you that they no longer have confidence in your senior management team? Diamond: No, sir.
A few minutes later, Tyrie asked this:
Tyrie: Isn’t it true that there were challenges from them about your stress tests, your accounting practices, the handling of the Protium deal? Of course, we have subsequently had the debt buy-back scheme, the interest rates swaps problems and of course now Libor. Isn’t this all part of a pattern?
Diamond: I don’t remember anything. I didn’t brief before this on the February meeting, do I don’t mean to skip over anything, if I am. There was a conversation, I think.
John Mann pounced on the differences between this testimony and the letter, which Tyrie read to the committee today. ‘Mr Diamond has been misleading this committee, hasn’t he?’ Mann asked Mr Agius. He added:
‘And yet we have this letter, which is the most extraordinary letter, on the most serious of issues to your bank at the time Diamond was in charge. He has calculatedly and deliberately misled this committee. It cannot be true that Mr Diamond forgot this letter.’
Agius’ repeated response was ‘I can’t speak to his testimony’, and he argued that the FSA letter related to ‘issues’ rather than ‘concerns’ about the ‘culture at the top’ of Barclays. MPs are now suspicious about Diamond’s evidence. Hopefully he’ll remember to call them by their surnames if he finds himself back in the committee room in the next week or so.
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