October 26, 2020

DealBook: After a Series of Missteps, Barclays Chief Gives Up His Bonus

Antony Jenkins, chief of Barclays.Lucas Jackson/ReutersAntony Jenkins, chief of Barclays.

6:44 p.m. | Updated

Antony P. Jenkins, the new chief executive of Barclays, said on Friday that he would forgo his bonus as the British bank struggled to rebuild its reputation after recent missteps.

British regulators are investigating new accusations that Barclays failed to properly disclose to shareholders a loan to a group of Qatari investors that gave the British bank a cash infusion during the financial crisis, according to a person with direct knowledge of the matter.

Last year, the bank disclosed that British and American authorities were investigating the legality of the payments related to the $7.1 billion cash injection to Qatar Holding, the sovereign wealth fund.

Mr. Jenkins is dealing with a series of legal headaches.

In June, Barclays agreed to pay a $450 million settlement with United States and British regulators over rate manipulation. The scandal forced a number of the bank’s top executives to resign, including the chief executive at the time, Robert E. Diamond Jr.

The British firm has also set aside $3.2 billion to cover legal costs related to the inappropriate selling of insurance to consumers. British authorities recently told the bank that it must review the sale of certain interest rate hedging products after 90 percent of a sample of the complex instruments were found to have been sold improperly. Analysts say the investigation may lead to millions of dollars of new legal costs.

With the controversy surrounding the bank, Mr. Jenkins said he did not want to be considered for a bonus that could have totaled up to $4.3 million, adding that many of the problems engulfing the bank were of its own making. The Barclays chief’s annual salary is $1.7 million.

“I think it only right that I bear an appropriate degree of accountability for those matters,” Mr. Jenkins said in a statement. “It would be wrong for me to receive a bonus for 2012.”

A spokesman for Barclays declined to comment about the investigation into potential wrongdoing connected to the loan to Qatari investors.

By giving up his bonus, Mr. Jenkins contrasts with his predecessor. Mr. Diamond was in line for a $4.3 million bonus for 2011 despite criticism about the bank’s performance. Faced with mounting opposition, Mr. Diamond and Chris Lucas, the bank’s finance director, eventually agreed to forgo half of the deferred stock payout if the British bank failed to reach a number of its financial targets.

Barclays, which will disclose details of a major overhaul of its operations when it reports earnings on Feb. 12, is expected to cut up to 2,000 jobs in its investment bank in an effort to reduce its exposure to risky trading activity, according to two people with direct knowledge of the matter.

Mr. Jenkins, who previously ran Barclays’ consumer banking business, told employees in January that they should leave the bank if they were not willing to help rebuild the firm’s reputation.

“My message to those people is simple,” Mr. Jenkins wrote in an internal note obtained by The New York Times. “Barclays is not the place for you. The rules have changed.”


This post has been revised to reflect the following correction:

Correction: February 1, 2013

An earlier version of this article indicated that the Barclays chief executive told employees earlier this month that they should leave the bank if they were not willing to help rebuild the firm’s reputation. He told them in January.

Article source: http://dealbook.nytimes.com/2013/02/01/amid-banks-legal-problems-barclays-c-e-o-gives-up-bonus/?partner=rss&emc=rss

DealBook: Amid Bank’s Legal Problems, Barclays C.E.O. Gives Up Bonus

Antony Jenkins, chief of Barclays.Lucas Jackson/ReutersAntony Jenkins, chief of Barclays.

LONDON – Antony P. Jenkins, the new chief executive of Barclays, said on Friday that he would not accept a bonus as the British bank struggles to rebuild its reputation after a series of recent scandals.

The announcement comes as British regulators investigate new allegations that Barclays failed to properly disclose to shareholders a loan to a group of Qatari investors that gave the British bank a cash infusion during the financial crisis, according to a person with direct knowledge of the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.

Last year, the bank disclosed that British and American authorities were investigating the legality of the payments related to the $7.1 billion cash injection to Qatar Holding, the sovereign wealth fund.

Mr. Jenkins is dealing with a spate of legal headaches.

In June, Barclays agreed to pay a $450 million settlement with United States and British regulators over rate manipulation. The case forced a number of the bank’s top executives to resign, including the chief executive at the time, Robert. E. Diamond Jr.

The British firm has also set aside $3.2 billion to cover legal costs related to the inappropriately selling of insurance to consumers. British authorities recently told the bank that it must review the sale of certain interest-rate hedging products after 90 percent of a sample of the complex instruments were found to have been sold improperly. Analysts say the investigation may lead to millions of dollars of new legal costs.

In light of the controversy surrounding the bank, Mr. Jenkins said he did not want to be considered for a bonus that could have totaled up to $4.3 million, adding that many of the problems engulfing the bank were of its own making. The Barclays chief’s annual salary is $1.7 million.

“I think it only right that I bear an appropriate degree of accountability for those matters,” Mr. Jenkins said in a statement. “It would be wrong for me to receive a bonus for 2012.”

A spokesman for Barclays declined to comment about the investigation into potential wrongdoing connected to the loan to Qatari investors.

By forgoing his bonus, Mr. Jenkins contrasts with his predecessor. Mr. Diamond was in line for a $4.3 million bonus in deferred shares for 2011 despite criticism about his handling of the bank’s performance. Faced with mounting opposition, Mr. Diamond and Chris Lucas, the bank’s finance director, eventually agreed to receive only half of the 2011 deferred stock bonus if the British bank failed to reach a number of its financial targets.

Barclays, which will unveil a major overhaul of its operations when it reports earnings on Feb. 12, is expected to slash up to 2,000 jobs in its investment bank in an effort to reduce its exposure to risky trading activity, according to two people with direct knowledge of the matter.

As part of the changes, the British bank has hired Hector Sants, the former chief of the Financial Services Authority, the British regulator, as its new head of compliance.

Mr. Jenkins, who previously ran Barclays’ consumer banking business, told employees earlier this month that they should leave the bank if they were not willing to help rebuild the firm’s reputation.

“My message to those people is simple,” Mr. Jenkins wrote in an internal note obtained by DealBook. “Barclays is not the place for you. The rules have changed.”

Article source: http://dealbook.nytimes.com/2013/02/01/amid-banks-legal-problems-barclays-c-e-o-gives-up-bonus/?partner=rss&emc=rss

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

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

DealBook: Barclays Picks One of Its Own as Chief

8:27 p.m. | Updated
Barclays, which has been tarnished by scandal, appointed a new chief executive on Thursday, as the British bank looks to restore its reputation and overhaul its culture.

By selecting Antony Jenkins, Barclays seemed to steal a line from the comedy series “Monty Python”: “And now for something completely different.”

Mr. Jenkins, 51, an Oxford-educated Briton with a soft-spoken demeanor, started his career 30 years ago as a cashier at a local Barclays branch. Over the last three years, he has overseen the sleepy consumer retail and banking business at Barclays.

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In short, he has little in common with his predecessor, Robert E. Diamond. Mr. Diamond, an American-born investment banker, brought a hard-charging ethos to the bank, transforming it into a top player on Wall Street. But the culture of risk-taking also proved problematic. In July, Mr. Diamond resigned amid revelations that Barclays manipulated key interest rates for its own benefit.

“They’re complete opposites,” said Frederick Rizzo, a European bank analyst at T. Rowe Price, a big mutual fund manager that owns shares of Barclays. “Before you had an aggressive American investment banker and now Jenkins is a low-profile retail banker.”

Libor Explained

Even as concerns emerged about the bank’s ability to make money under a potentially more reserved approach, regulators and analysts viewed the appointment as a safe bet during a tumultuous time. The selection signals a return to the British banking roots of Barclays, as it aims to bolster its credibility. In addition to the rate-rigging inquiry, the bank also faces questions about its capital-raising efforts during the 2008 financial crisis.

Mr. Jenkins made the legal woes — and broader concerns about the bank’s culture — a central focus on his first day as C.E.O. Appearing at a town hall at Barclays’ London headquarters that was broadcast to thousands of employees across the world, Mr. Jenkins, in suit and tie but no jacket, emphasized the need to repair a tarnished reputation.

“The key point is to rally the organization of Barclays,” he said in an interview on Thursday. “We’ve obviously been through a very difficult time, but we need now to move on from that and focus on the future.”

Early on, Mr. Jenkins emerged as a favorite for the job. As the search process gained steam this month, he met with the bank’s board. The board also pursued William T. Winters, a former senior investment banking executive at JPMorgan Chase.

Marcus Agius, the board’s chairman, said on Thursday that Mr. Jenkins “stood out among a very competitive field of internal and external candidates because of his excellent track record transforming” the retail and business banking unit. Mr. Agius, who is stepping down in November, will be succeeded by an outsider, David Walker.

In picking Mr. Jenkins, the board was drawn to his knowledge of the bank’s inner workings.

The first member of his family to attend university, Mr. Jenkins started at Barclays in 1983 as a trainee. He left six years later for Citigroup, but rejoined Barclays in 2006 to lead its credit card business, Barclaycard. In November 2009, he was named chief of the retail and business banking group, and joined the executive committee.

Mr. Jenkins learned of his latest promotion days ago while he was on vacation in his London home. The bank held off announcing its choice until it was approved by the Financial Services Authority.

Two months ago, regulators urged the board behind the scenes to replace Mr. Diamond. During his tenure, Mr. Diamond came to personify the riskier pursuits of investment banking and the eye-popping pay packages on Wall Street.

The bank on Thursday said Mr. Jenkins could earn up to £8.6 million, or $13.6 million. By contrast, Mr. Diamond last year received £17 million, or $26.9 million, in pay and perks, which prompted heckling at the annual shareholder meeting in April.

Some shareholders, as well as British regulators and politicians, have blamed the culture of risk-taking under Mr. Diamond for the bank’s ethical lapses.

In June, Barclays agreed to pay $450 million to settle accusations by American and British authorities that it tried to manipulate the London interbank offered rate, or Libor, a key benchmark. Regulators accused the bank of reporting false rates to bolster profits and make its financial position appear healthier, the first case stemming from a multiyear investigation into more than a dozen global banks. Just days after the settlement, Mr. Diamond resigned.

Mr. Jenkins will have to clean up the mess left behind.

The Justice Department is still investigating Barclays traders as part of the broader Libor case and could bring criminal charges. The bank is also facing private litigation over rate manipulation.

Other government inquiries focus on the bank’s capital-raising efforts during the depths of the financial crisis. On Wednesday, Barclays disclosed that the Serious Fraud Office, the British government agency that investigates and prosecutes white-collar crime cases, “has commenced an investigation into payments under certain commercial agreements between Barclays and Qatar Holding.” Last month, the bank also confirmed that the Financial Services Authority was investigating Barclays over a related matter.

Unlike its peers, the Royal Bank of Scotland Group and the Lloyds Banking Group, Barclays managed to avoid a government bailout in the dark days of 2008, turning instead to sovereign wealth funds in Abu Dhabi and Qatar for an infusion of capital. Barclays raised a total of $7.1 billion from Qatar in July and October 2008. Qatar Holding is currently the largest shareholder in Barclays, with a 6.65 percent stake, according to Bloomberg data.

As the bank confronts the various investigations, analysts generally hailed the selection of Mr. Jenkins, with Citigroup analysts calling it “a safe appointment.”

“It’s very important that they brought in someone who was a safe hand,” said Shailesh Raikundlia, an analyst at Espírito Santo Investment Bank. He noted, however, that some investors “wanted a clean slate” — meaning an outside candidate.

The main test for Mr. Jenkins, analysts say, will be to bolster the bank’s credibility and address its myriad legal liabilities. In an interview, Mr. Jenkins acknowledged that the challenge was steep but “doable.” “There are many elements of Barclays’ culture that are strong and good, but clearly there are elements that have to change,” he said.

Despite the scandals, the bank’s financial footing looks better than many rivals. Barclays emerged from the crisis relatively unscathed, picking up pieces of Lehman Brothers. In the first half of the year, net profit rose 9 percent, to $4.86 billion, from $4.43 billion in the period a year earlier, excluding an accounting charge and other one-time costs.

Some investors worry that the selection of Mr. Jenkins, who lacks experience in the investment banking business, will crimp profits. The investment bank, which includes parts of the old Lehman empire, dominates the company’s operations. The unit generated 32 percent of Barclays’ revenue last year, while producing half the bank’s profits before taxes.

While questions remain about its future under Mr. Jenkins, the new chief assured his staff on Thursday that his appointment “does not signal any change in strategy or lack of commitment to the investment bank.”

Instead, he is focused on fixing the bank’s reputation. “We have a tremendous opportunity to change Barclays in a way that will better serve all of our stakeholders — customers, clients, colleagues, shareholders and broader society,” he said in a letter to employees. “Barclays can, and will, be a better bank.”

David Jolly and Michael J. de la Merced contributed reporting

Article source: http://dealbook.nytimes.com/2012/08/30/barclays-names-c-e-o-amid-new-investigation/?partner=rss&emc=rss

DealBook: Barclays Names a New Chairman

David WalkerAndrea Merola/European Pressphoto AgencyDavid Walker
Marcus Agius, the chairman of Barclays, appeared before a British parliamentary committee on Tuesday.Will Oliver/Agence France-Presse — Getty ImagesMarcus Agius, the outgoing chairman of Barclays.

LONDON — Barclays, whose top management was toppled amid an interest rate manipulation scandal, on Thursday turned to a former Bank of England official to be its next chairman.

The British bank has named David Walker, 72, a longtime London banker and former official of the central bank and the British Treasury, to be chairman, replacing Marcus Agius. Mr. Agius and other senior executives of Barclays, including its chief executive, Robert E. Diamond Jr., resigned last month during an investigation into the manipulation of the London interbank offered rate, or Libor.

Mr. Walker’s first major task when he takes over in November will be to lead the search for a replacement for Mr. Diamond.

With the appointment of a new chairman, Barclays is hoping to draw a line under the Libor scandal, which has raised questions about the governance and culture at the British bank. Senior British officials had raised questions about the management style of Mr. Diamond, with concerns dating to his appointment to the top spot in late 2010, according to documents released by the Bank of England.

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Scrutiny of Mr. Diamond and the firm’s governance came months — and in one case, years — before Barclays came under fire for trying to manipulate key interest rates.

Mr. Walker has decades of experience that he will have to draw upon for the new role.

He has led government-mandated reviews into practices of the country’s financial services industry, as well as an inquiry into the Royal Bank of Scotland, which is 82 percent owned by the government after receiving a bailout during the financial crisis.

He has called on banks to disclose more information about the bonuses that they pay top executives, and is well respected within the industry as a corporate governance expert.

“David commands great respect within the financial services industry and will bring immense experience, integrity and knowledge to the role,” Mr. Agius said in a statement.

Mr. Walker is the former chairman of Morgan Stanley International, and currently holds a senior adviser position at the American bank. He also has held senior posts at the Lloyds Banking Group and the pension firm Legal and General.

As part of the transition, Mr. Walker will become a nonexecutive director at Barclays at the beginning of September, before assuming the chairmanship later this year. While the bank continues to search for a new chief, it is unlikely that a final decision will be made on who will take over the top spot until Mr. Walker assumes his responsibilities.

The British bank has moved quickly in finding a replacement for Mr. Agius, who was the first Barclays executive to resign over the Libor scandal.

After agreeing to a $450 million settlement with American and British authorities in late June in connection with the manipulation of Libor, Barclays has remained under fire from politicians on both sides of the Atlantic.

Local regulators have highlighted problems with the firm’s corporate governance, including efforts to avoid paying about $770 million in taxes, and questioned some of the bank’s accounting methods.

“Barclays often seems to be seeking to gain advantage through the use of complex structures, or through arguing for regulatory approaches, which are at the aggressive end of interpretation of the relevant rules and regulations,” Adair Turner, chairman of the Financial Services Authority, the country’s regulator, said in the letter to Mr. Agius earlier

An earlier version of this post misstated the age of David Walker. He is 72, not 73.

Article source: http://dealbook.nytimes.com/2012/08/09/barclays-names-a-new-chairman/?partner=rss&emc=rss

DealBook: Banks in Libor Inquiry Are Said to Be Trying to Spread Blame

Barclay's settlement prompted the resignation of top executives, including the chief executive Robert E. Diamond Jr., and helped to erase more than $3 billion of the bank's market value.Paul Thomas/Bloomberg NewsThe Barclays settlement prompted the resignation of top executives, including the chief executive, Robert E. Diamond Jr., and helped to erase more than $3 billion of the bank’s market value.

Major banks, which often band together when facing government scrutiny, are now turning on one another as an international investigation into the manipulation of interest rates gains momentum.

With billions of dollars and their reputations on the line, financial institutions have been spreading the blame in recent meetings with authorities, according to government and bank officials with knowledge of the matter. While acknowledging their own wrongdoing, institutions are pointing out actions at other banks that they believe are worse — and in some cases, extend to top executives.

One official involved in the case said that banks are emphasizing that “we’re not as bad as the next guy.”

The Swiss bank UBS, which has a history of regulatory run-ins, has shared e-mails, instant messages and other information suggesting it had colluded with traders at Deutsche Bank, HSBC and the Royal Bank of Scotland to manipulate key interest rates, according to court documents and bank employees. In talks with authorities, HSBC is providing its own account of the activities, according to a lawyer briefed on the matter. Citigroup has also detailed rate manipulation with other banks.

When the British bank Barclays recently negotiated a settlement with authorities, it highlighted that other European institutions took part in the rate-rigging scheme, said officials close to the case. Like UBS, Barclays has provided information on activities involving HSBC and Deutsche Bank.

Several banks are using Barclays’ $450 million settlement as a guidepost in preliminary discussions with authorities. JPMorgan Chase and Citigroup are each emphasizing to authorities that their chief executives were not implicated in the wrongdoing as in the case of Barclays, and therefore the banks deserve to be treated less severely, according to the officials.

A Deutsche Bank manager who oversaw traders is facing scrutiny, according to a person involved in the case. However, a Deutsche Bank spokesman said no managers or top executives had been aware of any rate manipulation, adding that the investigation was continuing.

JPMorgan, Deutsche Bank, HSBC and Citigroup have said they are cooperating with officials.

Authorities around the world are investigating more than 10 big banks for their roles in setting global interest rates like the London interbank offered rate, or Libor. Such benchmarks underpin trillions of dollars of financial products, including mortgages and student loans.

Regulators are examining whether banks colluded to move the rates up or down to get extra profits and limit losses on their trading positions. Some banks are also under investigation for reporting artificially low rates to make themselves appear financially healthier.

When banks first started conducting internal investigations at the behest of regulators two years ago, they figured the potential penalties would be manageable, according to bank officials.

But the size of the Barclays settlement and the growing public outcry have left banks scrambling to limit their culpability as the threat of criminal actions increases. Part of the banks’ problem is that their internal investigations have created a road map that authorities are using to pursue criminal and civil cases.

Those findings provide a detailed portrait of the wrongdoing.

Interviews with dozens of government and bank officials who spoke on the condition of anonymity because the investigation is developing, and a review of court documents and regulatory filings show varying degrees of exposure. Banks like UBS, Deutsche Bank and Citigroup uncovered that employees had worked with traders at other firms to influence rates, according to government and bank officials. A small number of institutions, including Credit Suisse and Bank of America, found more limited actions.

The extent of the evidence has created an every-bank-for-itself attitude.

The financial industry often tries to negotiate a common deal to avoid getting singled out for bad behavior. This year, five banks collectively struck a multibillion-dollar agreement with federal authorities to address foreclosure abuses.

With the rate investigation, institutions are not sharing information or even discussing the case with rivals, according to lawyers involved in the matter. In part, they do not want to appear to have close ties with their rivals, since such cozy relationships are part of the government’s inquiry.

“There is no information-sharing among banks unlike the past 15 years of federal investigations,” said a lawyer involved in the case.

So far, Barclays has borne the brunt of the fallout. In June, the British bank settled with British and American authorities for reporting false rates to bolster its profits and project a rosier picture of its financial position. The settlement prompted the resignation of top executives, including the chief executive Robert E. Diamond Jr., and helped to erase more than $3 billion of the bank’s market value.

At first, Barclays rejected a settlement offer by the Commodity Futures Trading Commission, the regulator leading the investigation, according to officials close to the case. The bank believed the terms were unfavorable, said a lawyer involved in the matter. As the agency prepared to take the case to court, negotiations resumed. While Barclays secured a modestly smaller penalty, the bank still paid record fines.

In trying to work out a deal, the British bank offered information on the multiyear scheme with Deutsche Bank, HSBC, Société Générale and Crédit Agricole, according to government and bank officials. Also, a senior trader at Barclays tried to manipulate the Euro interbank offered rate, or Euribor.

Other cases are expected to follow. The Justice Department is aiming to file criminal actions against two banks before the end of the year and is preparing to arrest former traders at Barclays and other banks, according to government officials. In addition, state attorneys general and local district attorneys have approached the Justice Department in recent weeks, seeking a role in the case.

Since the Barclays settlement, banks have been reassessing their defense strategies and reaching out to authorities. Officials warn that all talks with the banks are preliminary, and no settlement deals are imminent.

After targeting Barclays for rate manipulation four years ago, regulators gradually turned their attention to a wide swath of banks.

In a 2010 letter, the Commodity Futures Trading Commission contacted a small group of banks, including UBS. The regulator quickly expanded the list, sending a memo to all 16 institutions that helped set Libor rates at the time. The agency ordered the firms to hire outside attorneys to conduct an investigation into suspected rate manipulation, according to bank and regulatory officials.

After examining the extent of its wrongdoing, UBS moved swiftly to strike an immunity deal with government authorities. In its inquiry, the Swiss bank uncovered that one of its former traders, Thomas Hayes, had apparently worked with employees at Deutsche Bank, HSBC and the Royal Bank of Scotland to influence rates and make profits, according to bank officials and court documents. At times, the traders communicated via instant messages on Bloomberg machines, the court documents show.

UBS was eager to cooperate in part because the government typically only grants immunity to the first party to step forward in a case. The Swiss bank also wanted to avoid the harsh spotlight of a prosecution or a settlement, according to a bank official. The bank has been at the center of several financial scandals, including a rogue trader and an illegal tax shelter scheme.

Citigroup has been forthcoming with regulators, as well. After leaving UBS, Mr. Hayes moved to Citigroup where the problems continued, according to bank officials with knowledge of the case. The bank has handed over documents on that rate-rigging group.

Citigroup is emphasizing to authorities that the wrongdoing did not reach the upper levels of management, as it did at Barclays. Based on its internal investigation, the bank told regulators and its audit committee that neither its chief executive, Vikram S. Pandit, nor its chief financial officer, John Gerspach, was implicated, according to a bank official and a lawyer with knowledge of the matter. The bank’s investigation showed that its wrongdoing is mainly centered on another key benchmark, the Tokyo interbank offered rate.

In contrast, Deutsche Bank is facing heavier scrutiny in the United States. The German institution has been named in the rate conspiracies outlined by Barclays and UBS, as has HSBC. In working with regulators, HSBC is making employees available to government investigators and turning over e-mails and other information, according to one person with knowledge of the matter.

Ian Austen contributed reporting.

Article source: http://dealbook.nytimes.com/2012/08/05/banks-in-libor-inquiry-are-said-to-be-trying-to-spread-blame/?partner=rss&emc=rss

DealBook: Former Senior Barclays Executive Faces Scrutiny in Parliament

Jerry del Missier, former chief operating officer of Barclays, arriving to give testimony to Parliament on Monday.Simon Dawson/Bloomberg NewsJerry del Missier, former chief operating officer of Barclays, arriving to give testimony to Parliament on Monday.

LONDON — Jerry del Missier, a former senior Barclays executive, faced tough questioning on Monday about his role in the bank’s rate-manipulation scandal during a tense parliamentary hearing, indicating that he had instructed bank employees to report lower rates at the behest of regulators.

Mr. del Missier, 50, stepped down from the British bank this month, shortly after Barclays settled British and American claims that it had submitted false rates to improve its earnings and deflect concerns about its financial health.

The case centers on a benchmark known as the London interbank offered rate, or Libor, which is used to help determine the pricing for trillions of dollars of financial products, including home loans and credit cards.

On Monday, the Canadian-born Mr. del Missier, a top deputy of the former Barclays chief executive, Robert E. Diamond Jr., faced questions from British politicians about whether he directed employees to report artificially low rates. In testimony, Mr. del Missier indicated that he had received instructions from Mr. Diamond to lower the rates, after the chief’s discussions with bank regulators on the matter.

In 2008, Mr. Diamond sent Mr. del Missier and another senior executive an e-mail regarding the government’s concerns about the bank’s Libor rate submissions. Mr. Diamond also discussed the issue with Mr. del Missier by phone, according to Mr. del Missier’s testimony on Monday.

The e-mail detailed a conversation between Mr. Diamond and Paul Tucker, deputy governor of the Bank of England, the country’s central bank. The two men discussed the bank’s financial position at the height of the financial crisis. After receiving the e-mail, Mr. del Missier instructed Barclays officials on Oct. 29, 2008, to lower the bank’s Libor submissions in line with those of rivals, according to regulatory filings.

In testimony, Mr. del Missier said he had acted in response to the conversation with Mr. Diamond. Mr. del Missier said he believed that senior government officials had instructed the bank to alter the rates. Mr. del Missier, however, did not speak to anyone at the Bank of England or other senior regulators about the issue.

“I expected that the Bank of England’s views would be incorporated into our Libor submissions,” Mr. del Missier said during his testimony on Monday. “The views would have resulted in lower submissions.”

Barclays agreed last month to a $450 million settlement with American and British authorities about the manipulation of Libor. According to regulatory documents, a number of the bank’s traders and some senior executives altered the firm’s Libor submissions for their own benefit between 2005 and 2009.

Several top Barclays executives, including Mr. Diamond, Mr. del Missier and the bank’s chairman, Marcus Agius, have resigned in the wake of the scandal.

Mr. del Missier’s testimony appears to contradict earlier statements by Mr. Tucker, the Bank of England deputy governor.

Mr. Tucker told the same parliamentary committee last week that his conversation with Mr. Diamond was related to fears that the financial markets might view Barclays to be at risk if its Libor submissions continued to be higher than those of other international banks.

Mr. Tucker said he called Mr. Diamond to remind him that people in the markets were questioning whether Barclays had access to capital. In the aftermath of the collapse of Lehman Brothers in 2008, officials worried that the bank might have to be bailed out if the financial markets perceived the firm was a credit risk.

“I wanted to make sure that Barclays’ day-to-day funding issues didn’t push it over the cliff,” Mr. Tucker told the parliamentary committee.

The testimony by Mr. del Missier comes after statements from Mr. Diamond that he never told his deputies to report false Libor rates. Mr. Diamond said his discussions were misinterpreted.

Mr. del Missier, however, said the e-mail outlining the conversation between Mr. Tucker and Mr. Diamond represented an instruction from government officials to alter Barclays’ Libor submissions.

During his hourlong testimony, Mr. del Missier said he would not have instructed Barclays officials to lower the rate if he had not been asked to do so by senior British government officials. He also told the committee that he never followed up with the Barclays officials about the effect of lowering the submissions

British politicians repeatedly asked him whether lowering the bank’s Libor submissions in line with those of rivals was illegal, improper and wrongful.

“It didn’t seem an inappropriate action given it was taken from the Bank of England,” he said.

British lawmakers repeatedly asked Mr. del Missier why he was not aware of the manipulation of Libor at Barclays dating back to 2005. He said he was not aware of that activity until the beginning of 2010.

Barclays was “up to its armpits in dishonest activity in the run up to that phone call,” Pat McFadden, a British politician who sits on the committee overseeing the testimony, said in reference to Mr. Diamond’s phone call with Mr. Tucker in 2008.

Mr. del Missier’s career mirrors the rise of Barclays Capital, as the firm’s investment banking division was known. He joined the bank in the late 1990s, and became co-chief executive of the investment banking division in 2009 after holding several other senior positions.

He rebutted lawmakers’ accusations that he was taking responsibility for the rate manipulation in an effort to save Mr. Diamond’s reputation.

“I’m not the fall guy for anything,” he said. “I have resigned my position for the good of the bank.”

Article source: http://dealbook.nytimes.com/2012/07/16/former-senior-barclays-executive-faces-scrutiny-in-parliament/?partner=rss&emc=rss

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

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

DealBook: HSBC Aims for $3.5 Billion in Savings, Trimming Retail

HSBC said Wednesday that it plans to cut costs by as much as $3.5 billion over the next three years to improve profitability, which it said could be hurt by stricter financial regulation.

HSBC, one of Europe’s biggest banks, said it will focus on commercial banking activities and wealth management while scaling back its retail banking operations to the most-profitable countries.

‘‘This is not about shrinking the business but about creating capacity to re-invest in growth markets and to provide a buffer against regulatory and inflationary headwinds,’’ the chief executive Stuart Gulliver said. He was expected to give more details about the plan when he meets investors later on Wednesday.

HSBC is not alone among banks seeking to streamline at a time when new financial regulations force them to hold on to more of their capital, resulting in pressure on profitability. The Barclays chief executive Robert E. Diamond said in February that he would review businesses and close some that do not generate enough return.

HSBC, which has already decided to withdraw from Russia’s retail banking market, said it would test all of its operations and businesses for profitability and a set of other criteria. The bank also set a target for its cost efficiency ratio of 48 percent to 52 percent.

HSBC surprised some investors on Monday when it said that costs as a proportion of income rose to 60.9 percent in the first quarter from 49.6 percent in the first three months last year. The higher costs overshadowed a 58 percent increase of net income in the quarter.

The London-based bank, which generates about half of its profit in Asia, weathered the financial crisis better than many of its rivals and did not have to ask for financial help from the government. But its share price started to lag behind that of Deutsche Bank, JPMorgan and Barclays this year as some investors raised concerns about rising costs and the pace of growth.

Article source: http://dealbook.nytimes.com/2011/05/11/hsbc-aims-for-3-5-billion-in-savings-trimming-retail/?partner=rss&emc=rss