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DealBook: Documents Shed Light on Early Concerns About Former Barclays Chief

September 19, 2012 by Leave a Comment

Hector Sants, the former chief of the Financial Services Authority, raised concerns about Robert Diamond Jr., the former chief of Barclays.Stefan Wermuth/ReutersHector Sants, the former chief of the Financial Services Authority, raised concerns about Robert Diamond Jr., the former chief of Barclays.

Documents released by the British Parliament on Wednesday shed new light on regulators’ early concerns about Robert E. Diamond Jr., the former chief executive of Barclays who stepped down amid the rate-manipulation scandal.

An e-mail in 2010 detailing a meeting between Hector Sants, then the chief executive of Britain’s Financial Services Authority, and Marcus Agius, the outgoing chairman of Barclays, indicates that authorities raised questions about Mr. Diamond’s ability to run Barclays. While regulators eventually approved Mr. Diamond’s appointment as chief executive, they said their position could change in light of the rate-manipulation investigation.

The e-mail helps to clarify recent testimony by regulators over the rate-manipulation scandal.

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In June, Barclays agreed to pay $450 million to settle allegations that employees reported false rates in an effort to bolster profits and make the British bank appear healthier during the financial crisis. The case centers on a benchmark rate known as the London interbank offered rate, or Libor, which is used to help set the price of trillions of dollars of loans and other financial products. In the wake of the scandal, Mr. Diamond and other top executives bank resigned.

After the settlement, bank executives and regulators appeared before a parliamentary committee to discuss the case. The testimony, in part, highlighted the concerns about the firm’s culture, in particular under Mr. Diamond. Barclays executives had dismissed claims that regulators raised issues about the culture at the British bank. But the new documents, which were released on Wednesday, offer more detail on the specific worries, particularly connected to the Libor investigation.

Libor Explained

Robert E. Diamond Jr., the former chief of Barclays, resigned in July because of a scandal involving interest rate manipulation.Lefteris Pitarakis/Associated PressRobert E. Diamond Jr., the former chief of Barclays, resigned in July because of a scandal involving interest rate manipulation.

According to the e-mail, Mr. Sants of the Financial Services Authority warned the Barclays chairman that Mr. Diamond “had not reached the level of openness, transparency and willing to air issues” with regulators. The e-mail also shows that John Varley, then the chief executive of Barclays, promised to “coach” Mr. Diamond before handing over the reins at the beginning of 2011.

In the 2010 e-mail, regulators also took aim at Barclays’ “risk appetite and control framework,” while acknowledging that the bank had made progress in this area. Mr. Agius moved to reassure regulators, according to the e-mail, saying Mr. Diamond was “fully on board with the processes in place and will not want to risk failing in this area.”

“I’d like to record that in that conversation, I made clear that our concerns about Barclay’s culture were not some generic observation but specific to Barclays,” Mr. Sants wrote in a 2012 letter to Parliament.

Regulators approved Mr. Diamond’s new role in 2010, but offered a caveat. In a conversation with Mr. Agius, Mr. Sants noted the appointment “at this time was on the basis that the current view of the investigation does not have an adverse affect,” according to the e-mail.

Article source: http://dealbook.nytimes.com/2012/09/19/documents-shed-light-on-early-concerns-about-former-barclays-chief/?partner=rss&emc=rss

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DealBook: In Report, British Officials Question Testimony of Barclays’ Chief

August 18, 2012 by Leave a Comment

Robert Diamond, the former chief of Barclays, appeared before a London panel investigating interest rates in July.Paul Thomas/Bloomberg NewsRobert Diamond, the former chief of Barclays, appeared before a London panel investigating interest rates in July.

LONDON — In a report released early Saturday in London, British politicians said the former Barclays chief Robert E. Diamond Jr. had not provided lawmakers a full account of the actions inside the bank during recent hearings into the rate-rigging scandal.

The report also challenges some of Mr. Diamond’s assertions about the bank’s relationship with regulators. It also questioned the top leadership at the bank and the candor of Mr. Diamond’s testimony.

“Mr. Diamond’s evidence, at times highly selective, fell well short of the standard that Parliament expects,” Andrew Tyrie, the British politician who led the recent hearings, said in a separate statement.

Documents released by local authorities show that officials had questioned the culture at the top of the British bank as far back as 2010, though Mr. Diamond had said regulators were happy with the firm’s leadership.

The doubts about Mr. Diamond’s testimony come after several of Barclays’ senior executives, including its chairman, resigned last month. The firm agreed to a $450 million settlement with American and

British authorities over the manipulation of the London interbank offered rate, or Libor, one of the world’s most important benchmark rates.

Libor Explained

British lawmakers had called several of the firm’s executives and the country’s leading regulatory authorities to testify before Parliament’s Treasury Select Committee, which had been investigating the Libor scandal at Barclays.

The lawmakers’ latest report criticized Mr. Diamond’s recollection of concerns that regulators had raised when he was appointed chief executive, as well as issues with the culture at the British bank.

Also in his testimony, Mr. Diamond had said British authorities were pleased with his relationship with the Financial Services Authority, the country’s regulator. The regulators, however, testified that they had challenged the firm’s attitude toward risk and had called on Mr. Diamond to distance himself from colleagues in Barclays’ investment banking unit. In the latest report, it appears that lawmakers mostly sided with the authorities.

“It seems to us inconceivable that Mr. Diamond could have believed that the F.S.A. was satisfied with the tone at the top of Barclays,” the report said.

Mr. Diamond issued a sharply worded rebuke of the report.

“I am disappointed by, and strongly disagree with, several statements by the Treasury Select Committee,” Mr. Diamond said in a statement on Saturday. “There is little dispute that Barclays was both aggressive in its investigation of this matter and engaged in its cooperation with the appropriate authorities.”

The latest report also questioned the importance of a conversation that Mr. Diamond held with Paul Tucker, the deputy governor of the Bank of England, in 2008.

The discussion focused on the firm’s Libor submissions, and led to Jerry del Missier, a senior Barclays official, to ask some of the firm’s employees to alter their Libor rates. Mr. del Missier said he believed that he was acting on instructions from British government officials, though Mr. Tucker dismisses that contention.

Lawmakers said that Barclays’ employees had been manipulating rate submissions since 2007, and that Mr. del Missier’s ability to alter submissions showed a lack of regulatory compliance.

“It remains possible that the entire Tucker-Diamond dialogue may have been a smokescreen put up to distract our attention,” the report said. Poor judgment by the firm’s board led to a lack of controls, which could have stopped the rate manipulation from taking place, according to the report.

A Barclays spokesman said that the bank did not agree with all the report’s findings but was conducting an independent review of its business practices.

The report also highlighted failures by the Financial Services Authority to address the manipulation of Libor.

Concerns that firms were altering their Libor submissions were first brought to the attention of authorities in late 2007, according to regulatory filings. But British officials joined their American counterparts in investigating the abuses only in early 2010.

Adair Turner, chairman of the authority, told British lawmakers last month that regulators had not perceived Libor to be a major area of risk during the recent financial crisis.

“The manipulation was spotted neither by the F.S.A. nor the Bank of England at the time,” Mr. Tyrie said. “That doesn’t look good.”

The British government is reviewing how Libor will be set in the future. The inquiry may lead to greater regulatory oversight of the rate, while lawmakers are considering new laws that would make the manipulation of benchmark rates a criminal offense.

American and international authorities also continue to examine the actions of other global financial institutions, including Citigroup and HSBC. New York and Connecticut state regulators announced on Wednesday that they were widening their own rate-rigging investigations.

Article source: http://dealbook.nytimes.com/2012/08/17/in-report-british-officials-question-testimony-of-barclays-chief/?partner=rss&emc=rss

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DealBook: More Officials to Testify as Diamond Defends His Actions

July 11, 2012 by Leave a Comment

Robert E. Diamond Jr., Barclays' former chief, testified to lawmakers last week about the bank's interest-rate manipulation scandal.Pool photograph by Agence France-PresseRobert E. Diamond Jr., Barclays’ former chief, testified to lawmakers last week about the bank’s interest-rate manipulation scandal.

LONDON – Robert E. Diamond Jr., Barclays‘ former chief, defended his testimony as the list of senior officials set to appear before Parliament about the Barclays interest rate manipulation scandal is getting longer.

Top executives from the Financial Services Authority, the British regulator, and Jerry del Missier, a senior Barclays official who resigned because of the scandal, are to testify on Monday before a British parliamentary committee.

The regulators to testify include Adair Turner, chairman of the Financial Services Authority; Andrew Bailey, the head of its prudential business unit; and Tracey McDermott, the acting head of the regulator’s enforcement and financial crime division.

The move to question the senior British officials and Mr. del Missier comes after Robert E. Diamond Jr., the former head of Barclays, and Marcus Agius, its chairman, both testified before the committee.

On Tuesday, British lawmakers focused their anger on Mr. Agius, who was peppered with questions about the actions of Mr. Diamond and the culture inside the bank.

Their questions were centered on two letters that were sent by British regulators that raised questions about Mr. Diamond’s management style. Some of the concerns dated back to his appointment to the bank’s top spot in late 2010.

During his testimony last week, Mr. Diamond said the bank had maintained a good relationship with the Financial Services Authority, adding that he did not recall that the regulator had raised concerns about the bank’s activities or its internal culture.

The British politicians asked Mr. Agius whether Mr. Diamond had been completely forthcoming in his testimony.

“Would you say that Mr. Diamond lied to this committee?” David Ruffley, a member of Parliament, asked Mr. Agius.

“I can’t comment on Mr. Diamond’s testimony,” Mr. Agius replied.

In response, Mr. Diamond wrote to Andrew Tyrie, the committee’s chairman, late on Tuesday, saying he was “dismayed” that some of the politicians apparently believed he had been less than candid.

“Any such suggestion would be totally unfair and unfounded,” Mr. Diamond wrote, adding that he would be willing to discuss the issue with the British lawmakers. “The comments made at today’s hearing have had a terribly unfair impact upon my reputation.”

Diamond Letter to Tyrie

Article source: http://dealbook.nytimes.com/2012/07/11/more-officials-called-to-testify-on-libor-scandal/?partner=rss&emc=rss

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DealBook: Barclays’ Ex-Chief Tries to Deflect Blame in Inquiry

July 4, 2012 by Leave a Comment

Robert E. Diamond Jr. on Wednesday before a British parliamentary committee investigating the role of Barclays in a rate-manipulation scandal.Pool photograph by Agence France-PresseRobert E. Diamond Jr. on Wednesday before a British parliamentary committee investigating rate manipulation at Barclays.

LONDON — Robert E. Diamond Jr., the former chief executive of Barclays, defended the bank’s response to a rate-manipulation scandal as he testified on Wednesday before a British parliamentary committee.

Mr. Diamond, who resigned on Tuesday after the bank reached a $450 million settlement with American and British authorities related to the manipulation of key interest rates, said the actions of 14 traders at the bank that were connected with the scandal had made him “physically sick.”

The American-born banker tried to deflect attention from the firm’s role in the continuing investigation by authorities, noting that other major global financial institutions had also been implicated.

Mr. Diamond, who said he was notified about the fines and civil penalties a few days before the settlement was made public on June 27, also placed some of the blame on regulators.

He said the bank had raised concerns many times with American and British authorities about how Libor — the London interbank offered rate, a measure of how much banks charge each other for loans — was set.

“I can’t sit here and say no one in the industry didn’t know about the problems with Libor,” Mr. Diamond said. “There was an issue out there and it should have been dealt with more broadly.”

British politicians focused their questions on Mr. Diamond’s role in the scandal. The former Barclays chief, who initially appeared nervous giving his testimony but gradually became more comfortable during nearly three hours of questioning, took responsibility for the problems that occurred inside Barclays.

“To prevent further damage to the reputation of Barclays, I decided to step down,” Mr. Diamond said, adding that he had made the decision on Monday evening when support from regulators and shareholders for his position at the bank began to wane.

He reserved his most angry words for the Barclays traders who had manipulated rates to benefit their own trading positions. Some of the individuals based in New York and London could still potentially face civil and criminal prosecutions.

“I am sorry, angry and disappointed,” Mr. Diamond said, whose voice became increasingly emotional. “There’s no excuse for the traders’ actions. This is wrong, and I’m not happy about it.”

He reiterated that he had not instructed senior executives to suppress the bank’s Libor submissions.

Mr. Diamond described a phone call he received at the end of October 2008 from Paul Tucker, an official at the Bank of England, Britain’s central bank. Mr. Tucker questioned why Barclays was submitting rates consistently higher than those of rival banks, a sign of relatively poor health.

Mr. Diamond then e-mailed Jerry del Missier, a top deputy, about the conversation, saying that Mr. Tucker stated it “did not always need to be the case that we appeared as high as we have recently,” according to documents released by the bank.

Mr. del Missier, who also resigned on Tuesday, then directed employees to keep the submissions lower, or at least in line with those of rivals. His actions, some regulators say, were a result of a “miscommunication,” rather than instructions from Mr. Tucker.

“I was unaware that Jerry had the impression that Tucker’s phone call was taken as an instruction,” Mr. Diamond told the committee.

Mr. Tucker, who is the front-runner to take over as governor of the Bank of England, on Wednesday made a request to testify to the committee about his role in the Barclays scandal.

Politicians also asked Mr. Diamond whether he would give up any further bonuses or payments as part of his resignation package. The former Barclays chief said that any changes would be a question for the bank’s board.

Mr. Diamond was awarded £6.3 million, or $10.3 million, in pay and perks for last year, and British politicians have warned that any so-called golden parachute for leaving his post would be unacceptable.

“It would be completely wrong if people leaving under these circumstances were given some vast payoff,” Prime Minister David Cameron told Parliament on Wednesday. “It would be completely inexplicable to the public. I hope that won’t happen.”

Article source: http://dealbook.nytimes.com/2012/07/04/diamond-defends-barclays-response-to-interest-rate-scandal/?partner=rss&emc=rss

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DealBook: Robert E. Diamond Jr., Chief Executive of Barclays, Resigns

July 3, 2012 by Leave a Comment

Robert E. Diamond Jr., chief of Barclays.Jerome Favre/Bloomberg NewsRobert E. Diamond Jr., chief of Barclays.

3:37 a.m. | Updated

LONDON – Robert E. Diamond Jr., the chief executive of Barclays, resigned on Tuesday less than a week after the big British bank agreed to pay $450 million to settle accusations that it had tried to manipulate key interest rates to benefit its own bottom line.

Mr. Diamond’s resignation, which was effective immediately, follows mounting criticism targeted at Barclays’ actions from politicians and shareholders.

The British prime minister, David Cameron, had called on individuals to take responsibility, while other local politicians had said Mr. Diamond should resign.

“My motivation has always been to do what I believed to be in the best interests of Barclays,” Mr. Diamond said in a statement. “No decision over that period was as hard as the one that I make now to stand down as chief executive. The external pressure placed on Barclays has reached a level that risks damaging the franchise. I cannot let that happen.”

Marcus Agius, the bank’s chairman, who resigned on Monday, will now stay at the bank and lead the search for a new chief executive, according to a statement from Barclays.

Mr. Agius will head the executive committee at Barclays until a new chief executive is appointed, and will be supported by Michael Rake, the firm’s deputy chairman.

While Mr. Diamond is stepping down at Barclays, he will face continued scrutiny on Wednesday when he testifies before a British parliamentary committee.

Local politicians are expected to question him about the actions within the bank that led to the multimillion-dollar fines from the Justice Department and the Commodity Futures Trading Commission in the United States and the Financial Services Authority in Britain.

Fresh details about the case show how Mr. Diamond and other senior executives played a role in the questionable actions and failed to prevent them.

In 2007 and 2008, Mr. Diamond’s top deputies told employees to report artificially low rates in line with its rivals, deflecting scrutiny about the health of Barclays at the height of the financial crisis, according to several people close to the case.

Barclays declined to comment.

Mr. Diamond’s resignation follows a settlement that Barclays struck last week with the American and British authorities, part of wide-ranging inquiry into how big banks set certain benchmarks, including the London interbank offered rate, or Libor.

Those rates are used to determine the costs of $350 trillion in financial products, including credit cards, mortgages and home loans. American and international regulators are investigating several other banks, including HSBC, JPMorgan Chase and Citigroup.

In a letter to Barclays employees on Monday, Mr. Diamond said he was “disappointed and angry” about the bank’s past attempts to manipulate key interest rates.

“I am disappointed because many of these behaviors happened on my watch,” he wrote.

The changes in Barclays’ leadership come after Mr. Diamond helped transform Barclays’ investment bank into a major player on Wall Street.

The American-born Mr. Diamond joined the British bank in the late 1990s, and quickly expanded the investment banking unit into new areas, such as commodities and derivatives trading.

At the height of the financial crisis, Mr. Diamond, then the head of the investment bank, Barclays Capital, beefed up the firm’s presence in the United States by acquiring the North American operations of Lehman Brothers in 2008.

“I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth,” Mr. Diamond said in a statement on Tuesday.

Article source: http://dealbook.nytimes.com/2012/07/03/chief-executive-of-barclays-resigns/?partner=rss&emc=rss

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Frustration Grows as Nominee for the Fed Withdraws

June 7, 2011 by Leave a Comment

The candidate, Peter A. Diamond, an economics professor at the Massachusetts Institute of Technology and a Nobel Prize laureate for his work on labor markets, cited Republican opposition in asking the White House to withdraw his nomination.

But Democratic leadership did not press for a vote on the nomination, and Congressional aides said that the White House invested relatively little energy in fighting for Mr. Diamond. Moreover, they said that the administration had not submitted nominations for vacancies atop several of the federal agencies charged with overhauling and improving financial regulation in the wake of the 2008 crisis.

“There’s a deep feeling of frustration,” said one Democratic aide, who spoke on the condition of anonymity because of the sensitivity of the subject. “No one wants to insult the administration or put them in a position that’s uncomfortable for them or worse for them. So you’re just sitting around waiting for them to take the lead.”

The White House press secretary, Jay Carney, said on Monday that the White House did everything it could to push the nomination, and he lamented the “partisan obstructionism” that had prevented approval of Mr. Diamond.

“I don’t have a tick-tock on the different actions that different members of the administration took in support of this nomination,” Mr. Carney said in response to a question from a reporter. “We strongly supported it. We thought he was highly qualified. We regret that it’s come to this and he’s withdrawn his nomination.”

The withdrawal leaves two empty seats on the Fed’s seven-member board, which, along with selected presidents of the Fed’s regional banks, sets monetary policy. The position of vice chairman for supervision, created last year as a top bank regulatory post, also is vacant.

President Obama has not nominated a head for the Office of Comptroller of the Currency, which oversees national banks, or a new chairman for the Federal Deposit Insurance Corporation, which insures bank deposits and cleans up failed banks. There is no nominee to lead the new Consumer Financial Protection Bureau, or the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.

The White House has said for months that it will submit nominations “as soon as possible.” On Monday it promised action “in short order.” It is widely expected to nominate the F.D.I.C.’s vice chairman, Martin J. Gruenberg, to replace Sheila C. Bair, who ends her term as chairwoman in July. Mr. Gruenberg, seen as relatively noncontroversial, could be packaged with other nominees in the hope of a halo effect.

Democrats say that they hold Republicans responsible for preventing votes. In addition to derailing Mr. Diamond, Republicans forced the withdrawal earlier this year of a nominee to head the Federal Housing Finance Agency, and have said they will not allow a vote on any nominee to lead the consumer agency until the bureau is restructured.

There are also strategic considerations. A senior White House official said that the Obama administration had to weigh the costs of trying to pressure Senator Harry Reid, the majority leader, to push for cloture votes in the face of Republican opposition.

“We could go for a symbolic cloture vote. It would burn 30 hours on the clock. That’s 30 hours that the Senate is in session. So it’s a big ask of Harry Reid to say ‘put aside your legislative agenda and go for a cloture vote,’ ” the official said.

Mr. Diamond focused his criticism on Republicans in a sharply worded opinion article published Monday in The New York Times. “We should all worry about how distorted the confirmation process has become, and how little understanding of monetary policy there is among some of those responsible for its Congressional oversight,” he wrote.

Mr. Diamond said that Republicans were mistaken to treat his expertise in labor economics as irrelevant to decisions about monetary policy. “Understanding the labor market — and the process by which workers and jobs come together and separate — is critical to devising an effective monetary policy,” he wrote.

Senator Richard C. Shelby of Alabama, the senior Republican on the Banking Committee, reiterated on Monday his belief that Mr. Diamond had lacked the necessary qualifications.

“It is my hope that President Obama will now nominate someone capable of garnering bipartisan support in the Senate,” Mr. Shelby said in a statement Monday. “It would be my hope that the president will not seek to pack the Fed with those who will use the institution to finance his profligate spending and agenda.”

Mr. Shelby added that he had great respect for Mr. Diamond and wished him the best.

The Fed board of governors has long been populated with a mix of people including lawyers, bankers and economists with a wide range of specialties. Mr. Shelby himself has voted for a labor economist on at least one previous occasion: he supported the 1994 nomination of Janet Yellen, now the Fed’s vice chairwoman.

But the nomination became a proxy for a broader fight between the White House and Congressional Republicans over the government’s role in the economy. Mr. Diamond publicly supported a continuing Fed program to stimulate growth by purchasing $600 billion in Treasury securities. Mr. Shelby and other Republicans described the program as a backdoor method of lending the government more money.

Helene Cooper contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=4d454fc154f23cefbbd9978ed1648fd3

Filed Under: Economy News Tagged With: , ,

With Rebuke of Senate Republicans, Fed Nominee Withdraws

June 6, 2011 by Leave a Comment

Mr. Diamond, a professor of economics at the Massachusetts Institute of Technology and a Nobel Prize laureate for his work on labor markets, had waited more than a year for a Senate vote, a step that Republicans refused to allow.

“We should all worry about how distorted the confirmation process has become, and how little understanding of monetary policy there is among some of those responsible for its Congressional oversight,” Mr. Diamond wrote Monday in an Op-Ed article in The New York Times that announced his decision.

Mr. Diamond criticized Senate Republicans for treating his expertise in labor economics as irrelevant to decisions about monetary policy. “Understanding the labor market — and the process by which workers and jobs come together and separate — is critical to devising an effective monetary policy,” he wrote.

While the timing was unanticipated, the failure of the nomination had seemed inevitable. Senator Richard C. Shelby, the senior Republican on the Banking Committee, had said repeatedly that Mr. Diamond lacked the necessary qualifications.

“It is my hope that President Obama will now nominate someone capable of garnering bipartisan support in the Senate,” Mr. Shelby, who is from Alabama, said in a statement Monday. “It would be my hope that the president will not seek to pack the Fed with those who will use the institution to finance his profligate spending and agenda.”

Mr. Shelby added that he had great respect for Mr. Diamond and wished him the best.

The White House issued a statement Monday promising a new nominee “as soon as possible.”

“We are deeply disappointed that this candidate, who had initially seen bipartisan support, fell victim to partisan obstructionism at this important time for our economic recovery,” said Jay Carney, White House spokesman.

The withdrawal leaves two empty seats on the Fed’s seven-member board, which sets monetary policy together with selected presidents of the Fed’s regional banks. The position of vice chairman for supervision, created last year, also is vacant.

The empty seats are part of a broader void atop the agencies charged with overhauling and improving financial regulation in the wake of the 2008 crisis.

President Obama has not nominated a new head for the Comptroller of the Currency, which oversees national banks, nor a new chairman for the Federal Deposit Insurance Corporation, which insures bank deposits and cleans up failed banks. And Republicans have said they will not approve any nominee to lead the newest agency, the Consumer Financial Protection Bureau. So far the White House has not sought to test their intransigence.

Mr. Diamond’s nomination became a proxy for a broader fight between the White House and Congressional Republicans over the government’s role in the economy. Mr. Diamond publicly supported an ongoing Fed program to stimulate growth by purchasing $600 billion in Treasury securities. Mr. Shelby and other Republicans described the program as a backdoor method of lending the government more money.

In his opinion piece Monday, Mr. Diamond echoed a position the White House often has taken: Spending is not good or bad. It just depends what you are buying.

“In reality, we need more spending on some programs and less spending on others, and we need more good regulations and fewer bad ones,” Mr. Diamond wrote. “Skilled analytical thinking should not be drowned out by mistaken, ideologically driven views that more is always better or less is always better. I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.”

Article source: http://feeds.nytimes.com/click.phdo?i=4d454fc154f23cefbbd9978ed1648fd3

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DealBook: Barclays Posts Weaker Profit as Investment Bank Slips

April 27, 2011 by Leave a Comment

The British bank Barclays reported Wednesday that weaker investment banking performance caused its first-quarter profit to fall, setting the stage for sharp questions about its bonus plan at this year’s shareholder meeting.

The bank, based in London, posted £1 billion, or $1.65 billion, of net profit for the first three months of 2011, down 5 percent on the year-earlier figure. Top-line revenue fell 8 percent to £7.4 billion.

Barclays Capital, the investment bank, had revenue of £3.3 billion, down 15 percent from a year earlier, owing to a 22 percent decline in the unit’s fixed income, currency and commodities business. But revenue from the equities business gained 11 percent as stock markets rose.

Barclays noted that if a £351 million charge on its own debt were excluded, it would have posted £2 billion of overall pretax profit, up 10 percent.

‘‘We have made a good start in 2011 in a challenging external environment,’’ Bob Diamond, the chief executive, said in a statement.

Barclays executives, who are trying to revise the bank’s bonus policies, were preparing for hostile questioning later Wednesday at the company’s annual general meeting.

The Association of British Insurers, whose members include major institutional shareholders, has called on its members to closely review remuneration plans that would, among other things, give Mr. Diamond a base salary of £1.35 million — a 20 percent increase over that received by his predecessor, John Varley — and pay some bonuses with contingent capital securities, or ‘‘cocos.’’ Such bonds can be converted into equity if the bank runs into trouble, allowing it to add to its capital cushion.

Pensions Investment Research Consultants, a shareholder advisory group that had already criticized Barclays over what it characterized as “the complexity and opacity” of its remuneration policy, urged investors to seek answers from the bank over what appeared to be “£1.4 billion of bonuses awarded and the tax thereon that has not been put through the profit and loss account.”

The Independent Commission on Banking, a body backed by the British government, called this month for Barclays and other systemically important banks to hold more capital and protect individual clients from losses, but stopped short of calling for a separation of their retail and investment banking businesses.

While regulators have identified over-leveraging as one of the causes of the financial crisis, banks have resisted efforts to raise capital requirements, saying the measures would reduce their profits.

Mr. Diamond said that continuing the ‘‘constructive dialogue’’ with the I.C.B. was ‘‘an important priority’’ for the bank.

‘‘We are determined to play a responsible role in the formulation of the reform agenda and to facilitate economic growth in the U.K. by providing access to credit-worthy individuals and businesses,’’ the statement said.

Barclays said it raised its core Tier 1 capital ratio, a measure of its ability to withstand financial shocks, to 11 percent at the end of March, up from 10.8 percent at the end of December.

The bank said results were hit by a £532 million impairment charge the bank booked on Protium Finance, a holding vehicle for credit market assets that Barclays had sold to former employees.

The bank said it was now buying back the Cayman Islands-based vehicle.

Article source: http://dealbook.nytimes.com/2011/04/27/barclays-posts-weaker-profit-as-investment-bank-slips/?partner=rss&emc=rss

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