10 Jul 2012

Former Barclays chief Diamond waives £20m bonus

Former Barclays boss Bob Diamond forgoes a potential £20m in bonuses and share awards, but will still walk away with up to £2m.

On Tuesday night, Mr Diamond sent a letter to Treasury select committee chairman Andrew Tyrie saying he was “dismayed” that Mr Tyrie and some of his fellow committee members had suggested he was “less than candid” when he appeared before them last week, the day after quitting his post in the wake of the rate-rigging scandal.

Mr Tyrie told Channel 4 News he believed Mr Diamond had been “economical with the truth”, adding: “I’m saying I didn’t feel I got candid replies to some of the questions I asked Mr Diamond last week.”

Barclays chairman Marcus Agius told MPs at the Treasury select committee earlier that Mr Diamond had decided to voluntarily forgo his entitlements after quitting as chief executive.

Mr Diamond, whose severance package amounts to a year’s salary and pension contribution, said he hoped the agreement “will help close this chapter and allow Barclays to move forward and prosper” after the bank was fined £290 million for attempting to fix the interbank borrowing rate Libor.

Mr Diamond will get up to a year’s salary, pension allowance and benefits believed to be worth £1m to £2m.

The cross-party committee of MPs painted a picture of a chequered history between the Financial Servcies Authority (FSA) and Barclays leading up to the scandal.

‘Pattern of behaviour’

The committee cited a letter from the FSA flagging the regulator’s concerns about “a pattern of behaviour” in which Barclays sought to gain advantage through the use of complex structures which are “at the aggressive end of interpretation of the relevant rules and regulations”.

But Mr Agius said: “When any bank deals with its regulator, it has to deal with complex matters, it’s not like a speed camera catching you for going more than 30mph.

“Quite often, the points are open for interpretation and debate and we have chosen to debate with the regulators.”

Mr Agius revealed that Bank of England governor Sir Mervyn King played the decisive role in forcing Mr Diamond to quit last week.

He revealed how he and Sir Michael Rake, the most senior non-executive on the Barclays board, had been summoned to see Sir Mervyn last Monday – on the day Mr Agius’s departure was announced.

“We had a conversation in which he said that Bob Diamond no longer enjoyed the support of his regulators,” said Mr Agius, who then had to summon a telephone board meeting of non-executive directors to decide how to proceed.

‘Not in a good place’

Mr Agius and Sir Michael Rake went to Mr Diamond’s home on Monday to tell of the regulatory concerns. Diamond “was not in a good place,” said Mr Agius.

The Treasury committee is trying to establish the role the bank and the government played in the rate fixing.

Mr Agius, a senior non-executive director on the BBC executive board, also resigned but agreed to stay on to find Mr Diamond’s successor.

He told the committee he had resigned because he felt “ultimately responsible for the reputation of the bank”.

The committee pressed Mr Agius on the FSA’s review of Barclays that said the bank was aggressive in its practices and misleading on bank stress tests.


MPs also asked if Mr Agius had passed on the FSA’s “issues” with Mr Diamond when he was appointed as chief executive. Mr Agius said that he had. In his evidence to the committee last week, Mr Diamond said he had not.

The rate-fixing took place in Barclays Capital at a time when Mr Diamond headed the investment arm, however giving evidence last Thursday Mr Diamond said he had only discovered the rate manipulation last month.

Mr Agius admitted first hearing about the topic in April 2010.

He told MPs that the economic crisis at his bank several years ago put it in a state of “existential risk” when the scandal occurred.

“It doesn’t mean it was right… but it shows the extraordinary situation at the time.”

He also revealed that it was important to maintain a good relationship with the ex-CEO as he would consider calling on Mr Diamond to help Barclays at a future time.

Asked why he was chairman of a bank that paid three times the amount as bonuses to bankers than it did to shareholders – including pensioners – Mr Agius said it was “simplistic” to pay staff less.