Welcome to our live coverage of Marcus Agius’ testimony to MPs. The outgoing Barclays chairman faces questions on rate-rigging by the bank’s traders and his defence of Bob Diamond. By Tom Burgis and Ben Fenton in London. All times are London time.
12.53 That’s that for our live coverage of Agius’ evidence. That was brutal — even if the outgoing Barclays chairman somehow contrived to compare himself to Donald Rumsfeld and his bank to Roger Federer.
Three key nuggets from what we heard today:
- After points in Agius’ testimony contradicted Bob Diamond’s comments to MPs, some members of the Treasury select committee are convinced that Bob Diamond misled them
- Diamond will walk away with £2m in salary and cash in lieu of pension, inlcuding being paid double his contractual entitlement of six months’ notice. He has waived bonuses worth up to £20m
- FSA chairman Lord Turner wrote to Agius in April and told him that the regulator’s “cumulative impression” is that “Barclays has a tendency continually to seek advantage from complex structures or favourable regulatory interpretations”
12.41 Here’s a last thought from Chris Giles, the FT’s economics editor:
12.37 And with that, after two and a half hours in the hot seat, Agius is
ejected into the Thames allowed to depart.
12.34 John Thurso (Lib Dem) mentions that he has met Agius socially and considers him a good egg, or words to that effect. What went wrong? Agius replies: “I am not happy about where I am. I have gone back to think about each fork in the road. It is difficult to say what you would have done differently. It is a concatenance of events that have led us to where we are.”
What I am finding most trying is that the actions of this tiny minority of people are portrayed as being indicative of the culture of the bank as a whole.
Barclays has been around for 300 years. I would like to think it will be around for another 300 years. The culture is honest, it is customer-centric and it is competitive.
Honest because that has to cover everything we do in our dealings. People only come to us if we deliver what they want. Roger Federer has a competitive spirit and it is applauded.
Mr Federer of course uses his own rackets – if that is the appropriate word…
12.29 Tyrie: “It seems we are finding out a great deal from these exchanges that we should have found out a week ago from Bob Diamond.” Might Bob be recalled?
12.26 Another thought from Tony Tassell, the FT’s financial news editor:
Agius concedes that he knew that Jerry del Missier would be heavily criticised in the joint regulators report that fined Barclays £290m. Agius said he wasn’t specifically named. Leadsom asks of the statement by del Missier after his promotion that Barclays was going to the top of the table in compliance “was that a joke?” Agius: “No, it was not.”
12.25 Agius has been courteous throughout and kept his cool. But this has been one of the most thorough public grillings that the torrential British summer is likely to see.
12.23 Andrea Leadsom accuses Agius of putting a great British retail banking institution into the hands of someone whose inexperience in retail banking he himself had expressed concerns about.
12.22 Andrea Leadsom, a former Barclays employee now on the Treasury select committee, is astonished to hear Agius tell her that he did not know about this incident, from Martin Taylor’s FT op ed, when he appointed Diamond as chief exec:
One promising direction looked to be the domestic bond markets of developing economies, including Russia. Mr Diamond had hired some traders, and brought to the credit committee – which I chaired – a request for something like a fivefold increase in permitted exposure to Russian counterparties. I cut the request back by roughly half. They were disappointed, but within a few months the situation in Russia had deteriorated so much that no one was arguing about the credit ceiling.
At the end of August, Russia defaulted – not on its foreign currency bonds, which would have been no surprise, but on its rouble-denominated obligations. We were clearly in for a serious loss. I was in Canada and took a call from Patrick Perry, the bank’s experienced and judicious treasurer. At least, I said, we know the extent of the loss is well under control. Not quite, he replied. BarCap turned out to have an exposure significantly beyond the country limit that had been established. It had falsely marked some Russian banking counterparties as Swiss or American, and had blasted through the ceiling.
All international banks took losses on Russia in 1998, but Barclays’ experience was worse than most, entirely because of a failure to respect the internal control system. This breach was not made public, although the regulators were fully aware of it. We looked reckless, and our share price suffered serious damage. The traders were fired. Their leader maintained that he had known nothing about what was going on. He felt terrible. He loved Barclays. He offered to go. I concluded that the embryonic business that BarCap then was would fall apart without him, and that he should stay.
It was a close call. I suspect the subsequent history of the business would have been very different had I asked him to go. I deserve blame for being among the first to succumb to the myth of Diamond’s indispensability, to which some in Barclays were still in thrall only a matter of days ago.
Tyrie questions Agius on why he didn’t know about the incident raised by Martin Taylor.
“What kind of due diligence did you do on Bob Diamond? It wasn’t enough to alert you to this issue,” Tyrie asks. “Isn’t this another example of Barclays culture being amiss? That there was something wrong with the system?”
12.16 Helen Warrell, an FT reporter at Westminster, has a response from David Cameron’s spokesman to the news that Bob Diamond will walk away with some £2m.
The prime minister’s spokesman said on Tuesday that the £2m pay-off was still a decision “for Bob Diamond and for the board of Barclays”. However, he said their decision to forgo Mr Diamond’s bonus was a sign that the bank “understand public concern and that they understand there’s a need for a change of culture in banking”.
12.13 Agius is at pains to separate the behaviour of a few traders — whom he describes, using the same word as Diamond, as “reprehensible” — from the culture of the bank as a whole. He fends off a line of questioning suggesting that the culture of the investment bank has over-run that of retail banking.
12.09 Tryie notes that some of the Libor-fiddling was conducted by submitters on behalf of former Barclays traders who had moved on to other banks. Was that, he asks, a case of Barclays’ culture “infecting” other banks?
Agius refuses to be drawn, beyond saying that he sees how such an interpretation could be reached.
12.08 Garnier asks about the FSA supervisor who said Barclays was best in class. Are we at the dawn of a huge, colossal, colossal banking scandal? Agius says he hopes not, that it is just an example of extraordinary circumstances.
12.07 Agius remains pretty unflappable despite the pummeling he is taking. But he fails to explain how the compliance systems at Barclays failed to spot the rate-fiddling. He repeats: “It failed and that was wrong.”
Mark Garnier MP, former investment banker, asks about an article that a Barclays whistleblower wrote in Independent on Saturday that there was a culture of fear in Barclays. It said Libor-fixing was escalated up the line because if you didn’t escalate problems, you got fired.
On 177 occasions swaps traders in NY were emailing about rates, but that was never passed on up the line.
Agius simply says: “We admit there was a failure.”
12.03 And this from Steve Hawkes, business editor of The Sun:
12.02 Tony Tassell, the FT’s financial news editor, tweets:
11.57 Another awkward moment. Agius concedes that he knew that Barclays was under investigation for potential Libor manipulation at the time he accepted the chairmanship of the British Bankers’ Association, the body that oversees Libor.
11.55 Pushed, Agius concedes that, in its efforts to conserve some “goodwill” with Diamond, he is to be paid for double his stipulated notice period of six months. MPs are struggling to understand whether or not the ex-chief exec is on “gardening leave”. If he did indeed resign with “immediate effect”, the would seem to suggest he is not serving his notice period.
11.53 Yet more questions on who in Barclays senior management knew what when has Marcus Agius borrowing from Donald Rumsfeld’s celebrated comment about “unknown unknowns”. Agius can only offer:
“You don’t know what you don’t know.”
11.50 Agius knocks back suggestions that he offered himself up to protect Diamond. He repeats his line that shareholders did not want the chief exec to depart.
11.41: The committee is onto the detail of the Libor rate-fixing. Agius says: ”Because the market appeared to be malfunctioning, we looked exposed because our rates were higher.” He agrees that this would mean it would suit Barclays to be low-balling its Libor numbers, but that this was done by lower-ranked executives.
11.38: Patrick Jenkins, the FT’s banking editor, has this summary of the first part of the Agius rotisserie.
FSA chairman lord Turner’s letter to AGIUS from April 10 is damning.
Talks about multiple concerns over Barclays’ aggressive approach to interpreting bank regulation.
He says the bank’s arguments on capital risk weightings “inefficiently used up our resource and goodwill”.
Stress test results were “confusing and potentially misleading”.
Overall, “cumulative impression” is that “Barclays has a tendency continually to seek advantage from complex structures or favourable regulatory interpretations”.
11.37: Tyrie now accuses Diamond of “another complete lack of candour” in his evidence last week. It seems impossible that he will not be recalled by the select committee. For what it is worth, the language here is stronger than anything that has arisen in recent select committee hearings.
11.35: Agius has been forced to admit that “I may have misspoke earlier” when telling the committee that Diamond was getting £1.35m (his one year’s salary) as a pay-off. In fact, he concedes, it is about £2m because it also includes a cash payment in lieu of pension contribution.
11.31: Here is that dramatic exchange pushing towards an accusation that Diamond lied to parliament.
Agius is asked about Diamond’s testimony last week in which he said that at a meeting in February with the FSA, the regulator was “specifically happy” with the control exercised by the chief executive.
But Mr Agius, in his letter replying to Lord Turner on April 19 “it was clear that ‘tone from the top’ is one of the FSA’s concerns”.
Agius is asked: “On the basis of that would you say that Mr Diamond lied to this committee?
A: I can’t comment on Mr Diamond’s testimony.
Q: Would you say that those two statements, which contradict one another in pretty much words of one syllable…that of those two statements, one of them is untruthful? I ask you again: Did Mr Diamond lie to the select committee?
A: I am not going to speak to Mr Diamond’s testimony.
Q: So you are not defending him?
A: I am not going to speak to it.
Q: Under your chairmanship a great British bank has been dragged through the mud. Are you ashamed of that?
A: I care deeply about what has happened to Barclays. I said so in my resignation letter.
11.26 Here, for your reading pleasure, are the four letters released today. Two are between Agius and Lord Turner, chairman of the FSA. Another is to Agius from Hector Sants, FSA chief exec. The fourth is from Agius to Tyrie, chairman of the committee, yesterday.
11.24 Agius says he first became aware of the investigation into the manipulation of Libor in April 2010. During the period of rate-fiddling, concerns that Libor submissions were being abused “did not come up to the board”, Agius insists.
Dealings related to Libor were long considered low risk. When the financial crisis struck, that created the opportunity for people to take risks and take advantage, Agius says. The compliance structures should have been changed, he says. “We were behind the curve and that is most unfortunate.”
11.15 In the wake of the Libor settlement — and after Agius’ own resignation had failed to slake the public bloodlust – Sir Mervyn King, the governor of the Bank of England, told Agius “Bob Diamond no longer enjoyed the support of his regulators”. At that point, the board called for his resignation.
11.08 This is becoming a bloodbath. Pushed again, Agius confirms that he “would have” given the Turner letter to Diamond. He certainly discussed it with him. MPs are reading out lengthy passages from the letter admonishing Barclays.
After Agius acknowledges he passed the details of the FSA’s letter to Diamond, Tyrie offers an aside: “It is so important this letter, that the chief executive scarcely remembers it.”
Agius’ own letter says the FSA raised concerns about the “tone of the top” at Barclays. That would seem to be diametrically opposite to what Diamond himself told the committee.
Would you say that Mr Diamond lied to this committee, Agius is asked? Again, he says he cannot speak to Bob’s testimony.
11.05 Agius is asked whether he has ever received as damning a letter as the one Lord Turner sent to Barclays in April.
Agius won’t swallow the term “damning”. He prefers “firm”.
“I have not had another letter similar to this,” he concedes.
11.02 Agius says Diamond resigned because “it became clear that he had lost the support of his regulators”.
10.59 Agius is pushed on estimates that Barclays has been paying three times as much in bonuses to top executives as it was in dividends.
Barclays has “tried to achieve a far better balance” between pay and dividends. “We have a long way to go,” he concedes.
“I am completely sympathetic to the shareholders: they have had a rough ride.”
Cut pay too fast and staff simply leave, he argues. Cut too slowly relative to dividends and shareholders would vote out the board.
10.57 Agius says Diamond will walk away with the remainder of his £1.35m annual salary.
10.55 Agius says he passed on the issues regulators raised about Barclays to Diamond. Diamond told MPs he had no recollection of such concerns. The committee scents blood.
10.52 Paul Waugh of Politics Home tweets:
10.47 Barclays has released the details of Diamond’s payoff. The statement is here.
The Board has asked Mr Diamond to support the transition to the new Chief Executive as necessary, and he has agreed. Consistent with his contract of employment, Mr Diamond will receive up to 12 months’ salary, pension allowance and other benefits; and he has agreed to forgo his contractual entitlement to tax equalisation going forward. The Board has agreed with Mr Diamond that he will not receive any future bonus or incentive awards; nor will he receive any further compensation payment in connection with the termination of his employment.
10.46 Agius refuses to be drawn on whether Diamond misled the committee as John Mann (Labour) pushes him. But he will hand over minutes of a meeting at which the regulator’s comments were discussed. Agius is not enjoying this.
10.44 MPs are bristling. Bob Diamond’s evidence glossed over the negative comments in Lord Turner’s letter to Agius earlier this year, dwelling only on that comment praising “the tone at the top”. Now they have the letter itself, released to the committee, shortly before Agius took his seat, shows some tough talking from Lord Turner about Barclays’ behaviour. Once more, it seems, Agius is taking a bullet for Bob.
10.38 More from FT economics editor Chris Giles:
10.37 Agius, hitting back against MPs’ suggestions that Barclays is badly run, says an FSA regulator looking into corporate governance told him privately that the bank was “best in class”.
10.35 Chris Giles, the FT’s economics editor, tweets:
10.34 Agius has moved on to the days in which Barclays’ top managers weighed their response to the record £290m fine imposed last month by US and UK regulators for the manipulation of Libor rates. The top four execs decided to forgo their bonuses but that did not assuage the public clamour. Agius says: “The message we received for the market was that the one outcome shareholders did not want to see was the departure of Bob Diamond.” So Agius says he decided to go himself: “I felt ultimately responsible for the reputation of the bank.”
10.30 Tyrie lays into Diamond’s testimony on these exchanges with the FSA — which he clearly thinks Bob underplayed in his evidence. Diamond showed a “cavalier attitude” to the committee, Tyire suggests.
10.26 Tryie ripostes by quoting a letter from FSA boss Lord Turner earlier this year to Agius saying that Barclays had, through its behaviour, “used up our resource[s] and goodwill.”
Turner also urged “a tone of full co-operation and transparency” in Barclays’ dealings with regulators. Tyrie suggests that means that such a tone had not been adopted hitherto.
Under pressure from Tyrie, Agius concedes that Barclays’ relations with the FSA was “strained”.
10.21 Like Diamond in his evidence, Agius says Barclays was given the approval of regulators earlier this year. The FSA, the City watchdog, came to see the bank in February and said “we are satisfied with the tone at the top at Barclays”, Agius says.
10.17 Tryie, the committee chairman, starts to get into the question of what sort of bank Agius was overseeing by quoting an FT op-ed from earlier this week in which former Barclays boss Martin Taylor said, he, too, fell for “the myth of Diamond’s indispensability“.
10.16 Simon Nixon of the Wall Street Journal tweets:
Some might suggest that parliament surely comes first.
10.10 The members of the Treasury Select Committee are taking their seats.
BREAKING NEWS Agius says: Bob Diamond has voluntarily decided to forgo any deferred bonuses to which he would otherwise have been entitled. The maximum would have been £20m.
But there is no word on salary. Bob’s salary is about £2m.
10.06 Mark Kleinman of Sky has a whiff of what Diamond’s payoff might be.
09.44 Described in one report this morning as the “antithesis of brash”, Marcus Agius is expected to give a contrasted performance before the Treasury select committee to that delivered by Bob Diamond this week. Yet Barclays’ English gent chairman and its hard-charging American chief executive were an inseparable duo until the Libor-fiddling scandal ended their reign. First Agius threw himself overboard to allow Diamond to remain, then Bob had to go anyway and the chairman declared that he would stay on to steer the listing ship until a new captain is found to take the helm.
The opprobrium that has been heaped on the pair over the past fortnight was only the latest dousing. In April Agius was heckled by Barclays shareholders as he defended Diamond’s £25m pay package in a year when returns fell well short of the bank’s target.
Today Agius, the steward of Barclays’ long-suffering shareholders’ interests, is likely to face questions from MPs on its traders rate-fiddling antics. After a 30-year career at Lazard before his move to Barclays, he can also expect a grilling on the culture of British banking. As the recently departed chairman of the British Banking Association, the body that oversees Libor (which measures the rate at which banks lend to one another and serves an indication of their financial health — at least when traders are not rigging the figures), he might have a thing or two to say on whether the benchmark retains any credibility.
And for good measure, there is talk this morning that we’ll get details of Diamond’s severance package, which is likely to cause outrage if it comprises anything more than his bus fare home.