FSA’s Bailey tells MPs of ‘culture of gaming’ at Barclays
Giving evidence to the Treasury Select Committee on the LIBOR fixing scandal, the head of the Financial Services Authority’s (FSA) bank supervision arm (pictured) said the watchdog had had serious concerns about Barclays’ investment banking operations.
“There was a culture of gaming, and gaming us. It had to change. We drew the conclusion that there was a problem with this institution.
“You could not escape the conclusion that the culture of this institution was coming from the top.” Asked by MPs if this referred to Bob Diamond, Bailey replied: “Yes.”
He also said former Barclays CEO Bob Diamond had given “highly selective” testimony when he appeared before the committee. It is possible the TSC will recall Diamond for further questioning.
Meanwhile the FSA confirmed it is investigating seven other financial institutions over LIBOR, not all of which are UK banks. The head of the FSA, Lord Turner, was asked if the abuse of LIBOR was just the tip of the iceberg. He replied:”We don’t know… but I would be amazed if this was everything.”
Earlier in the session, former Barclays COO Jerry del Missier had given evidence which contradicted that of Diamond.
He told MPs Bob Diamond instructed him to lower the bank’s LIBOR submissions, on the orders of the Bank of England’s deputy governor Paul Tucker.
“Mr Diamond told me Mr Tucker had given the instruction,” del Missier told MPs.
Asked by Andrew Tyrie whether he knew his actions were illegal, the former COO said: “It did not seem inappropriate given that it [the instruction] had come from the Bank of England.”
Del Missier also implicated other senior bank staff in the scandal by telling the committee he reported the request to ‘lowball’ LIBOR to Barclays’ compliance department, which did not act on the information.