Financial watchdog 'warned Barclays about Diamond'
on 19/09/2012 16:22:59
Hector Sants, the then head of the Financial Services Authority (FSA), told former Barclays chairman Marcus Agius that the regulator agreed to Mr Diamond's appointment on the grounds that a Libor-rigging investigation had no "adverse effect".
But Mr Sants emphasised that the investigation was ongoing and could change the FSA's position, according to a file note released by the Treasury Select Committee.
Mr Diamond resigned amid intense political and public pressure after Barclays was fined £290m (€360.2m) by UK and US regulators for manipulating the Libor, a key interbank lending rate.
Mr Sants met Mr Agius on September 15, 2010, to confirm the FSA's approval of Mr Diamond's appointment but with some issues it expected the Barclays board to address.
He raised concerns over Mr Diamond's relationship with the regulator, the filenote said, and added that he had "not reached the level of openness, transparency and willingness" seen in his predecessor John Varley.
Mr Varley planned to "coach" Mr Diamond in his remaining six months.
Mr Agius reportedly said Mr Diamond was "very competitive and lost out in the previous chief executive selection" but will "mature and relax" given he achieved his goal.
In a letter sent to committee chairman Andrew Tyrie MP on August 20 this year, Mr Sants said: "The FSA was fully aware that the ongoing investigation might come to conclusions which would be relevant to Mr Diamond's suitability.
"However, at the time, since the investigation was not concluded, it would not have been appropriate to prejudge its outcome."
Referring to the meeting with Mr Agius, Mr Sants added: "I specifically made clear that we reserved the right to re-assess his (Mr Diamond) suitability in the light of the conclusions reached by this investigation and requested he make this clear to Mr Diamond.
"Secondly, I would like to record that in that conversation, I made clear that our concerns about Barclays' culture were not some generic observation but specific to Barclays, and asked that these concerns be communicated by Mr Agius to Mr Diamond. Mr Agius confirmed that he would do this."
Mr Diamond gave evidence to the committee in the wake of the revelations over the fixing of Libor.
The American banker blamed a "series of unfortunate events" for his shock departure but denied he was "personally culpable" for the actions of traders at his bank.