COMMENTARY

Peter Burgess

Europe Barclays chairman resigns amid scandal Marcus Agius steps down as interest rate fixing scandal threatens to widen to other banks.

Mike Rake, chairman of BT, is favourite to replace the outgoing chairman [Reuters]

The chairman of Barclays Plc has stepped down, becoming the first victim of a UK interest-rate rigging scandal that is threatening to expand to other banks.

Marcus Agius, chairman at Barclays for more than five years, announced on Monday that he left his post in the face of public and political fury over the bank's efforts to distort the rate at which banks lend to each other.

But his resignation did not take the heat off chief executive Bob Diamond, who is also under pressure to go.

'The buck in Barclays stops with Bob Diamond, and it is Bob Diamond who must accept responsibility,' said John Mann, a Labour politician who is part of a panel of lawmakers who will grill Diamond on Wednesday and Agius on Thursday.

'He must resign. He's got to go. There is no role for people like him if banking is to be trusted again in this country and if British banking is to restore its tarnished reputation in the world, which of course is of great importance to our economy,' Mann said on Sky News.

Prime Minister David Cameron has called the scandal 'extremely serious' and said management had 'some big questions to answer'. Authorities also ordered a review into the working of a key lending rate between banks.

Scottish bank

Barclays received a $453 million fine by British and US regulators last week for submitting inaccurate submissions on the Libor interest rate.

The bank admitted that some of its traders attempted to manipulate the setting of the London interbank offered rate, or Libor, which is used worldwide as a benchmark for setting prices on about $350 trillion worth of derivatives and other financial products.

It emerged on Sunday that the Royal Bank of Scotland had sacked four traders over their alleged involvement in the affair, raising suspicions that the practice was widespread.

Cameron on Friday reiterated his intention to bring Diamond and others at the bank to account.

'How many people were engaged in this activity, who were they, who was managing them, to whom were they accountable, how much did the management of this company know about what was happening,' he asked

Fresh scandal

Extracts from an Financial Services Authority report released on Wednesday showed that Barclays staff mistakenly believed the Bank of England had encouraged them to manipulate the rate, according to the Press Association, Britain's domestic news agency.

The scandal is a fresh blow to Britain's embattled banking sector following massive bailouts paid for by taxpayers.

Cameron also vowed not to let possible fines end up being used by the bank to reduce its annual tax bill.

'These fines should not be reducing the bills of banks they should be reducing the bills of hard-pressed taxpayers and that is how it is going to be,' he said.

Source: Agencies