Barclays scandal: Serious questions to answer, says Cameron in Yorkshire

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PRIME Minister David Cameron said today that Barclays Bank’s management has serious questions to answer over allegations that it manipulated lending rates at which banks lend to each other.

Speaking during a visit to Todmorden, West Yorkshire, to inspect damage done by recent flooding, he was asked whether chief executive Bob Diamond should resign.

David Cameron in Todmorden today

David Cameron in Todmorden today

He 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?”

Mr Cameron said: “This is a scandal. It is extremely serious.

“They’ve had a very large fine and quite rightly. But frankly the Barclays management team have some big questions to answer.

“How did this happen? Who was responsible? Who’s going to be held accountable for it?

“These are issues they need to determine and determine quite rapidly.

“In terms of what happens next, I would say that the regulator should use all the powers and means at their disposal to pursue this in the way they feel is appropriate.

“I would also make the point that this happened some years ago, under a previous government. The rules in place of a previous government.

“We are changing these rules and if there is more we can do to toughen them up, we’ll take that action.”

Pressure was mounting on Mr Diamond to step down following the rate-rigging scandal that has rocked the banking industry.

He waived his annual bonus for 2012 yesterday after the bank was fined £290 million by US and UK regulators for manipulating the rates at which banks lend to each other to boost its profits.

Chancellor George Osborne said Serious Fraud Office investigators were in talks with the City watchdog over the scandal.

Mr Osborne told MPs the affair exposed yesterday was “a shocking indictment of the culture of banks like Barclays in the run-up to the financial crisis”.

The Financial Services Authority (FSA), which along with US regulators landed Barclays with a £290 million fine for manipulating the rates at which banks lend to each other, was holding talks with the Serious Fraud Office (SFO), he said.

Shares in Barclays plummeted 17%, wiping £4 billion off its market value, while taxpayer-backed Royal Bank of Scotland dropped 14% as Mr Osborne said it was among several global banks also being investigated.

Mr Osborne added: “It is clear that what happened at Barclays, and potentially other banks, was completely unacceptable, was systematic of a financial system that elevated greed above all other concerns, and brought our economy to its knees.”

Lord Oakeshott, a former Liberal Democrat Treasury spokesman, described the bank as “a casino that was rigging the wheels and loading the dice”.

“If Bob Diamond had a scintilla of shame, he would resign,” he said. “If Barclays’ board had an inch of backbone between them, they would sack him.”

The controversy, which was illustrated in a series of emails between traders and Barclays staff, could spread to other lenders, including HSBC and taxpayer-backed Royal Bank of Scotland.