July 3 (Bloomberg) -- Barclays Plc’s top three executives resigned amid a deepening dispute with the Bank of England about whether the central bank pushed the lender to submit artificially low Libor rates during the financial crisis.
Robert Diamond stepped down today as chief executive officer and Jerry Del Missier quit as chief operating officer, the London-based lender said in a statement. Chairman Marcus Agius will also leave once he has found a replacement for Diamond, who has worked at the bank for the past 16 years.
The three are leaving after regulators fined the bank a record 290 million pounds ($455 million) for attempting to rig the London interbank offered rate. Bank of England Governor Mervyn King and Financial Services Authority Chairman Adair Turner intervened to force Diamond out, the British Broadcasting Corp. reported. A day before Diamond was due to appear before lawmakers, the lender released a note of a 2008 call which purported to show Paul Tucker, the central bank’s then markets director, hinted that Barclays could lower its Libor rates.
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“Tucker stated that the levels of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently,” Diamond said in an Oct. 30 e-mail to then CEO John Varley and Del Missier.
Diamond, of Concord, Mass., didn’t believe he had received any instruction or that he gave any order to Del Missier to lower the bank’s submissions, according to evidence provided by the bank to lawmakers today. Del Missier concluded that the Bank of England had instructed the firm not to keep Libor so high and instructed rate-setters to lower their submissions, Barclays said.
Systematic Attempts
“As a result of what he believed was a genuine misunderstanding, Jerry was the most senior officer who gave instructions to lower Libor rates,” Agius said on a conference call with journalists today. “That obviously puts him in a very difficult situation.”
Officials at the Bank of England couldn’t comment immediately on the document.
UK and US regulators found Barclays “systematically” attempted to rig the London and euro interbank offered rates for profit. Libor, which is determined by 18 banks’ daily estimates of how much it would cost them to borrow from one another for different time frames and in different currencies, is the benchmark for more than $360 trillion of securities, including mortgages, student loans and swaps.
“I don’t think anybody should underestimate the seriousness of this,” said Dominic Rossi, chief investment officer for equities at Fidelity Worldwide Investments, one of Barclays’s 10 biggest shareholders.
‘Damaging Franchise’
Diamond had yesterday defied pressure to quit, pledging to implement the findings of a review into how the bank sets Libor. U.K. regulators are weighing whether to start criminal probe into Libor-fixing.
“The external pressure placed on Barclays has reached a level that risks damaging the franchise,” Diamond said in the statement. “I cannot let that happen. 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.”
Barclays pared gains of as much as 4.8 percent and was down 0.7 percent at 167.70 pence at 4 p.m. in London trading, giving the company a market value of about 20.4 billion pounds.
“Barclays is in big trouble,” said Jason Kennedy, CEO of Kennedy Group, a London recruitment firm. “The captain is gone, the first officer is gone. The chief engineer has gone and therefore the oil tanker is drifting with no port of call.”
Romney fund-raiser
Mitt Romney’s campaign announced yesterday Diamond will no longer be cohosting a London fund-raiser for the presumptive Republican nominee.
“Mr. Diamond decided to step aside as a cohost for the upcoming London reception to focus all his attention on Barclays,” Romney campaign spokeswoman Andrea Saul said. “We respect his decision.”
Romney was planning to attend the fund-raiser when he is in town for the opening ceremonies of the Olympics. The price for attending the dinner ranged from $25,000 to $75,000, according to the London Telegraph.
Diamond gave $2,500 to Romney last year and has donated to a variety of candidates, including Senator Kirsten Gillibrand, a New York Democrat, and Senator Scott Brown, a Massachusetts Republican.
The Romney campaign would not immediately say whether the fund-raiser was still in the works or who else would be co-hosting.
Matt Viser of the Globe contributed to this report.