Bank of England Deputy No Barclays Influence

Bank of England Deputy No Barclays Influence.

According to Paul Tucker, the deputy governor of the Bank of England (BoE), he did not give Barclays instructions to lower its Libor submissions in 2008.  He believes that Ex-Barclays boss Bob Diamond's account of a telephone conversation between the two of them on 29 October 2008 gave "the wrong impression".

Bob Diamond resigned from Barclays last week and Mr Tucker has stated that Mr Diamond's resignation was the right decision.

Mr Tucker claims that in 2008 there was concern that after RBS, HBOS and Lloyds had to be bailed out by the government in October 2008, Barclays could be "next in line".  At the time, Barclays' submissions of its borrowing rates were higher than those of other banks and he claims that he was warning Mr Diamond that Barclays risked scaring investors to such an extent that they might find the market became closed to it.

Emails released earlier this week show that the BoE had almost daily contact with Barclays over inter-bank lending at the end of October 2008.  At this time, during the height of the financial crisis, Barclays was trying to manipulate Libor rates by submitting lower borrowing rates.  These rates, submitted by a number of banks, go into calculating the daily Libor, or London inter-bank lending rate, which is the basis for millions of daily financial transactions.

Mr Tucker, was asked if any government official or minister in 2008 had asked him "to lean on" Barclays or any other bank to lower their Libor submissions and his reply was “absolutely not”.

Our view

It appears that all politicians are running scared on the Barclays issue.  Who do we trust more? The Bank of England, Politicians or Investment Bankers? Answer: none of them.

Back to: News Home