Barclays Chief Resigns After LIBOR Scandal

Barclays Chief executive Bob Diamond has resigned after the LIBOR fixing probe. Barlcays bank was fined £290m by regulators for manipulating LIBOR, the benchmark interbank interest rate used by the banks. The scandal deepened last week after Barclays indicated that they believed the Bank of England had sanctioned the false submission of LIBOR rates. 

Many believe that Barclays have got off lightly with a £290m fine given the severity of the scandal. This will trigger a further loss of confidence in the banking system whichhas been plagued with high profile scandals including the mis-selling of PPI cover, the recent RBS system failure and excessive bonuses paid to management. 

Bob Diamond had already been in the spotlight earlier in the year having been challenged by investors over excessive pay. Investors voiced their fury over revelations that the bank was paying for Bob Diamond’s £5m tax equalisation bill. The Libor scandal was simply one step too far for Bob Diamond, who was not held high in the public opinion.  Barclays chairman, Marcus Agius, resigned earlier in the week reportedly to save Bob Diamond but to no avail. 

The scandal will continue to affect the whole industry and will reignite the proposals to separate the high street banking operations from the riskier investment banking operations. Simply to “ringfence” the investment banking divisions is not enough as the major banks have become too big to fail.