Mr. Jenkins and the firm’s chairman, David Walker, told politicians on Tuesday that they were prioritizing ethics and reducing risky trading activity, adding that they would take responsibility if future problems were discovered at the bank. The Barclays’ chief, who agreed to forgo his bonus in response to the series of scandals that have hit Barclays in recent years, said he would resign if another scandal was uncovered while he was leading the bank. “The chief executive is responsible for what happens during their tenure and when incidents happen the price needs to be paid and I believe were I to find myself in that position I would do the right thing,” Mr. Jenkins said on Tuesday. When politicians asked Mr. Jenkins if he was eradicating the culture that he inherited from his predecessor Robert E. Diamond Jr., Barclays’ new chief said he was indeed “shredding that legacy” of sometimes being “too self-centered and too aggressive.” [Dealbook, related]
Barclays CEO Promises To Clear Out His Desk In Hypothetical Scenario In Which Bank Decides To Start Engaging In Rampant Fraud AgainBy Bess Levin
The regulator didn’t specifically suspect anything re: propensity for manipulating Libor, just a general feeling it couldn’t necessarily trust the guy, which Barclays chairman Marcus Agius conceded was not entirely off base. Read more »
Antony Jenkins said he will outline his plans for Barclays in the first quarter of next year. “The challenges that confront investment banking as an industry are driven by regulatory change and the economic environment,” the new CEO said by telephone today. “It requires us to think strategically about the direction of investment banking.” The investment bank is led by Rich Ricci, a Diamond appointee. With increased regulation from Europe and the U.K., volatile market conditions for mergers and acquisitions and continuing criticism of bankers’ pay by politicians, Barclays has faced calls from analysts and shareholders to either sell the division or reduce its size. “The Barclays Capital decade and Bob Diamond will be confined to history,” said Simon Maughan, a financial industry strategist at Olivetree Securities in London. “What investors want to see is far more dramatic cost cutting, and the question is will Jenkins be enough of his own man to do it. It’s not Barclays’s style.” [Bloomberg]
Protesters at Colby College on Saturday afternoon called on the administration to “restore Colby’s moral compass” and demand the resignation of Robert E. Diamond Jr., chairman of the college’s board of trustees…Among the roughly dozen demonstratoers, Josh Lawrence, of Farmingdale, said college officials should acknowledge that millions in donations to Colby came from alleged illegal profits to Barclays and, in turn, Diamond. “They should make a public statement and not take money from him again and remove him as the chairman,” Therrien said. A Colby spokesman said earlier this month that the college is “mindful” of Diamond’s situation. “Nothing that’s emerged from these stories has changed Bob’s relationship with the college,” Colby spokesman Michael Kiser said in a story published July 14 in the Morning Sentinel and Kennebec Journal. “He’s long, long been a valuable supporter and a great leader for the board of trustees.” [Morning Sentinel via Counterparties]
Barclays ex-chief operating officer, Jerry del Missier, contradicted Robert Diamond, saying his former boss told him to submit artificially low Libor rates, and blamed compliance managers for failing to act. Del Missier, 50, told Parliament’s Treasury Committee today that he received an instruction from Diamond, then chief executive officer, that he took to have come from the Bank of England. He said he then “passed the instruction along” to Mark Dearlove, head of the bank’s money-markets desk, to lower its contributions for the London interbank offered rate… [Bloomberg, related]
The Barclibor scandal doesn’t seem to be going away, so it might be productive to try to figure out how much outrage is the right amount of outrage and express it in dollars. You can be all “what a bunch of crooks, with the emails, and whatnot” and sure, but there are lots of crooks in the world and for you to expend your energy being mad about particular crooks should require a considered judgment as to whether they are petty crooks or massive, massive crooks. And despite the $800 trillion notional size of the market they were monkeying with, the range of answers given to this question is unusually broad, from a dismissive “it’s still not clear just what the big harm was in the Libor scandal” to a mouth-foaming “this is the mega-scandal of mega-scandals.”
So start with the question of who got hurt by the basic horse-trading fixing where Barclays increased its fixings to make money on its contracts: derivative trader called submitter, said “hey [raise | lower] me some Libor because I have some contracts fixing today,” and the submitter did in exchange for champagne or just a manly pat on the ass. Here who got hurt is sort of messy and boring: you got hurt if you borrowed floating-rate money, or paid floating on a swap, and Barclays pushed your relevant Libor up on a fixing date for your contract; and you got hurt if you lent floating-rate money, or paid fixed on a swap, and Barclays pushed your relevant Libor down on a fixing date for your contract. And in expectation probably neither happened, for you personally.
More relevantly, you get the very strong sense from the Barclays emails that the traders manipulating Libor often thought they were shooting against other banks doing equal and opposite manipulations, so it’s not clear that it worked. In fact in some sense you have to hope that they were right and this was a systemic problem: if it was just Barclays then they actually manipulated rates,* while if it was everyone then probably no one managed to manipulate rates for their own advantage – unless there was some systemic reason for the Libor submitter banks to manipulate Libor in one direction prior to the financial crisis, on which more later.
The second question is who got hurt by more systemic fixing where Barclays – and maybe others – and maybe at the BoE’s oblique suggestion – systematically pushed their Libor submissions down to make themselves appear healthier than they were. This struck me as potentially a bigger deal (dollarswise) yet somehow more forgivable, and The Economist is with me: Read more »
While most offspring are typically not available for comment following the resignations, voluntary or otherwise, of their banker dads (lookin’ at you, Jimmy Cayne, Jr.), earlier today prolific Tweeter Nell Diamond had this to say to the Brits who have been cheering her father’s departure: “George Osborne and Ed Miliband you can go ahead and #HMD.” Read more »