Royal Bank Of Scotland Share News (RBS)

Tue, 10th Jul 2012 12:15

LONDON, July 10 (Reuters) - Barclays Chairman Marcus Agius faced a grilling by British lawmakers on Tuesday as part of a probe into the Libor interest rate rigging scandal.

Following are comments from Agius from the hearing in parliament's Treasury Select Committee:



ON DIAMOND'S RESIGNATION

'I had a conversation with my board  who were not in a happy place as you can imagine. Just the non-executives, we had a telephonic board meeting, at which we discussed what had happened. We concluded that we had no choice but to call for his resignation.'



ON BREAKING THE NEWS TO DIAMOND

'We explained what had happened ... he was utterly depressed as you can imagine. The conversation was not long. He asked for time to talk to his family, and we left confident that if he hadn't already made the decision, that he would make the right decision.'



ON THE BOE'S ROLE IN DIAMOND'S RESIGNATION

Question: Did you have any conversations about Mr Diamond's position with the govenor of the Bank of England?

'Yes. We went to see him and we had a conversation, the two of us (Sir Michael Rake and Agius) with him, at which it was made very plain to us that Bob Diamond no longer enjoyed the support of his regulators.'



ON WHEN AGIUS HEARD ABOUT THE LIBOR RIGGING

'I was notified first of the investigation and that was the first I heard of any of these practices - or the possibilty of any of these practices - in April 2010.'



ON WHY MANAGEMENT DID NOT SEE THE LIBOR MANIPULATION

'It did not occur to us, as I said, our principal concern was the state of the funding market rather than the operation of the Libor market as a technical matter.

'If your question is 'should we have asked those questions', evidently we should have done but as I said at the time we were more preoccupied, we were at a moment of existentail risk.'



DOES THE MANIPULATION REFLECT A POOR CULTURE

'I think it reflects the extraordinary times that existed then.' Asked does it not reflect your procedures or compliance? 'No. Of course not. Of course not. That is not behaviour that would be in the normal course.'



ON WHO WAS RESPONSIBLE

'That decision was taken by a certain individual but did not come up to the board.'

Asked who who would have taken that decision? 'I don't know.'



ON DIAMOND'S CONVERSATION WITH BOE'S TUCKER

'I was not aware of that note, or that conversation taking place with Paul Tucker until quite recently. Did I talk to John Varley about our anxieties about funding? Yes I did.'



ON THE LIBOR MARKET

'For many years the activities of the Libor market were seen to be low risk because the passage of the Libor rate was very constant, the spreads were very narrow, very little happened and secondly because of the way the Libor rate is struck the chances that anybody could manipulate the rate successfully was deemed to be very very low.'



ON THE PUBLIC OUTCRY

'The solution we devised was that the four senior executive officers who were on the deck when these matters occurred should recognise their responsibilities by forgoing their bonuses.

'We hoped obviously that would be deemed proportionate. Evidently we were wrong because the public outcry afterwards was extraordinarily great.'



ON THE DILEMMA FACING BARCLAYS

'So as we went into that weekend I was faced as Chairman with the dilemma that there was far greater reputational damage than we had anticipated, and certainly far greater than we had sought, that there was a requirement for some further action from the bank.'



ON THE ISSUE OF PAY

'We have tried very hard to manage compensation down, we have tried very hard to achieve a far better balance as between the shareholders and between the employers. But there's a natural limit to how far we can go.

'If we reduce the payment of our people too fast, they leave, if we don't go fast enough, our shareholders vote us out, we have to somehow strike that balance.

'I do believe that we have done as much as we could in the circumstances, and I think we have a long way to go, I'm completely sympathetic to shareholders.'



ON THE FSA LETTER

'I think this is a very important letter and one we took very seriously. I have not had another letter similar to this.

'I don't wish to be pedantic but I don't regard this as damning. I regard this as a firm letter from our regulator. I think this is a very important letter and one we took very seriously. I have not had another letter similar to this.'



ON THE RELATIONSHIP WITH THE REGULATOR

Question: What word would you like to try and summarise your relationship with the regulator? Strained? Difficult?

'Strained I think would be reasonable.'



ON DIAMOND SEVERANCE PACKAGE

'Bob Diamond has voluntarily decided to forgo any deferred consideration and deferred bonuses to which he otherwise would have been entitled to. The maximum amount would be 20 million pounds.'



ON SHAREHOLDER OPINION

'The message we received, in strong terms, from the market, was that the one outcome the shareholders did not want to see was the removal of Bob Diamond (..) they believed in him as very effective chief executive.'



(Reporting by UK bureau) Keywords: BANKING LIBOR/AGIUS

(kate.holton@thomsonreuters.com)

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