Libor Scandal: Culture clubbed

“I THINK it’s very important that people don’t expect too much from regulation,” said Sir Mervyn King, governor of the Bank of England, a few days after Barclays bank had paid £290m ($450m) in fines for attempting to rig LIBOR, a benchmark interest rate, between 2005 and 2009. But as Barclays’ chastened chairman, Marcus Agius, was questioned by a parliamentary committee on July 10th, it became clear that regulators are increasingly minded to discipline banks they judge to be poorly managed.

Mr Agius confirmed to MPs that watchdogs had forced Barclays’ chief executive, Bob Diamond, to resign after the bank’s misdeeds became public. On July 2nd Sir Mervyn summoned Mr Agius and his deputy, Sir Michael Rake, to a meeting at which they were told that Mr Diamond had lost the support of the Bank of England and the Financial Services Authority (FSA). Sir Mervyn said he had no power to direct Barclays. But Mr Agius realised he had little choice in the matter. He later called at the home of Mr Diamond, who resigned the next day. Barclays’ boss will receive a £2m payoff but will forgo deferred bonuses due to him worth up to £20m.

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