The chairman of Barclays, Marcus Agius, has announced he will resign today, in an effort to take some of the heat off the bank following the revelations that it was involved in fixing the price of the London interbank offered rate (Libor), an internationally important measure of lending costs used to set rates for mortgage holders, credit card users and businesses.
Agius will say in a statement that his resignation is a sign that "the buck stops with me", but the real pressure remains on Bob Diamond, the bank's CEO. Lord Oakshott, the Lib Dem peer, commented that the board is so hopeless that:
They've just shot the head of the firing squad and missed the prisoner.
As well as the grilling he will receive from the Treasury selected committee on Wednesday, Diamond has been struck a blow by new evidence showing that he discussed the rate fixing in detail with a Bank of England deputy governer, Paul Tucker. In 2008, the pair spoke about Barclays’ submissions to Libor, and as the conclusions of that conversation were passed down, it seems to be the case that managers at the bank "mistakenly" thought that they had permission to submit artificially low estimates.
Sources at both banks insist this was the result of a "misunderstanding", and it should be noted that Barclays had already been rigging rates for over a year before that call. Nonetheless, the fact the bank carried on doing so for another seven months is not good for Diamond or Tucker.
The Financial Times reports that Diamond has support, but that it can only go so far, according to one person close to the bank:
The board is united behind him at the moment. But there is a recognition that politicians can make the situation far more difficult.
The paper adds that one of the main reasons why Diamond is safe is that shareholders are concerned about the lack of a credible replacement. In a way, this is the largest failing of Agius; while it is Diamond's job to ensure that scandals of this nature do not happen, it is the Chairman's job to ensure that if they do, the CEO can be replaced with ease. Agius will also likely relinquish his position as the chair of the British Bankers Association, the group in charge of setting Libor.
The scandal has begun spreading further afield than just Barclays. The most telling phrase to have emerged over the weekend is "Milly Dowler moment", with several bankers throughout the industry concerned that the revelations could be the concrete trigger which takes the public from a general sense of unease to a specific understanding of widespread corruption. On Thursday, economist and Staggers contributor Ann Pettifor launched a petition calling for a Leveson-style inquiry into the industry, and on Saturday, following Ed Miliband's support for the same, David Cameron took announced a review of the workings of interbank lending rates – not quite the full thing, but a step towards it which will be quite unwelcome for many bankers.
Barclays too has caught review-mania, announcing a "root and branch" review of all the banks past practices which have been revealed as flawed and produce a new mandatory code of conduct. It will be conducted by an "independent third party" who will report directly to the banks non-executive board members.