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Other banks to be more culpable in the scandal than Barclays

in International Business

Other banks to be more culpable in the scandal than Barclays

Senior managers have warned that Libor scandal will envelop other banks.

According to a memo from Barclays chairman Marcus Agius and other senior executives to staff: “”As other banks settle with authorities, and their details become public, and various governments’ inquiries shed more light, our situation will eventually be put in perspective.”

The memo said that shareholders and regulators “all have a right to feel let down” by the bank after its manipulation of Libor is revealed.

Meanwhile, Barclays’ former chief operating officer Jerry del Missier has to answer MPs’ questions on Monday.

According to Barclay’s own explanation of events in October 2008, the bank’s former CEO Bob Diamond had discussed Barclay’s persistently high Libor submissions with the Bank of England deputy governor Paul Tucker. There were fears that the high interest rate of bank would signal that the bank was in trouble.

Mr. Diamond summarized his conversation with Paul Tucker to Mr. Missier, who then misinterpreted Mr. Diamond’s summary to mean that the Bank had given Barclays permission to under-report its own borrowing costs in order to appear to be in line with other banks.

Barclays, as a result of misreporting its Libor, faced a fine of USD 450m. Other banks, both in the UK and the US, are believed to have a part in the scandal and are under investigation.

Libor, the London Interbank Offered Rate, is a benchmark rate set each day by the British Banker’s Association based on the interest rate that 16 major international banks in London tell it that they must pay in order to borrow cash from other banks. It is used as a benchmark rate for trillions of pounds worth of financial contracts, including many mortgages.

Tags assigned to this article:
Barclays Libor scandalJerry del Missier

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