Skip to main content

Barclays' ex-boss Diamond gives up $31 million bonuses

By the CNN Wire Staff
July 10, 2012 -- Updated 1555 GMT (2355 HKT)
Bob Diamond resigned as boss of Barclays in the wake of the Libor rate-rigging scandal.
Bob Diamond resigned as boss of Barclays in the wake of the Libor rate-rigging scandal.
STORY HIGHLIGHTS
  • NEW: Barclays will pay the legal bills of former chief Bob Diamond if necessary, a source says
  • Chairman Marcus Agius is giving evidence on a rate-rigging scandal
  • Agius says Barclays deeply regretted the circumstances that led to Diamond resigning
  • Diamond will still receive a year's salary, the bank says

London (CNN) -- Former Barclays bank chief executive Bob Diamond will voluntarily give up bonuses worth $31 million after he resigned in the wake of a rate-rigging scandal, the bank said Tuesday.

Diamond will still receive 12 months salary after his resignation last week, the bank said Tuesday. That's £1.35 million (about $2 million), according to the bank's annual report.

It is twice as much as he is entitled to under his contract, which has a six-month notice period, bank chairman Marcus Agius said.

Barclays will also pay Diamond's legal bills if he faces criminal investigation, a source close to the bank told CNN Tuesday. The source asked not to be identified because of the sensitivity of the information.

Agius, giving evidence to the Treasury Select Committee inquiry into the scandal, said Diamond's decision was one which "the board welcomes and I am glad he has done it."

Barclays chairman on the hot seat
Bob Diamond defends Barclays
Levene: Culture of money must change
'Age of irresponsibility' in banking

In a statement, Agius said the board deeply regretted the circumstances that led to Diamond resigning from Barclays.

"Despite having no personal culpability, he recognizes more than anyone the negative attention that they have generated and has taken characteristically strong action to address that," Agius said.

Barclays' reputation has been hammered by a scandal over the rates at which banks lend each other money.

The rate, known as the London interbank offered rate, or Libor, is is set every morning by banks posting the rate at which they are willing to borrow with the British Bankers' Association.

The BBA publishes Libor as a result of this.

The Libor affects how much interest ordinary people pay on everything from credit card debt to home mortgages and student loans.

Barclays was fined $450 million by British and American regulators last month after admitted some of its trading desks purposely underreported its interest rates.

Diamond said he hoped the decision on his pay and bonuses "will help close this chapter and allow Barclays to move forward and prosper."

Agius' evidence follows that of Bank of England's deputy governor Paul Tucker Monday, in which he denied being pressured by politicians to ensure Libor rates were lowered. He also denied pressuring Barclays to lower its rates.

Diamond last week said he was "sorry, I'm disappointed and I'm angry" about the rate-fixing. "This was wrong and I'm not happy about it, but we put all the resources we could to make sure it was dealt with."

He said also "this doesn't represent the Barclays that I know and I love." Diamond blamed the wrongdoing on 14 traders out of "a couple thousand."

A report from the UK's Financial Services Authority concluded the rate-fixing scandal was of the "utmost seriousness."

Between 2005 and 2009, when Diamond was in charge of the investment branch of Barclays bank, traders were influencing the pricing of rates which impact up to $800 trillion of securities.

E-mails revealed as part of the rate-fixing investigation showed traders were seeking beneficial rates for their trading positions.

During the credit crisis of 2007 and 2008, Barclays' high Libor postings came under scrutiny and the bank, concerned about "unfounded negative perceptions," lowered its Libor submissions, according to Barclays notes to the Treasury Committee.

A host of other banks, including Deutsche Bank, Royal Bank of Scotland, Credit Suisse, Citigroup, JPMorgan Chase and UBS, are being investigated by regulators. Lawsuits have been filed against the banks in the United States, and are being prepared in the UK.

CNN's Jim Boulden, Irene Chapple, Richard Allen Greene and Nina dos Santos contributed to this report

ADVERTISEMENT
Part of complete coverage on
Banking crisis
August 19, 2012 -- Updated 0252 GMT (1052 HKT)
A British parliamentary report slammed Barclays bank on Saturday for its "disgraceful" actions that led to a rate-rigging scandal.
August 16, 2012 -- Updated 1202 GMT (2002 HKT)
Standard Chartered is far from the only bank to be implicated in illegal transactions with sanctioned nations.
July 12, 2012 -- Updated 1350 GMT (2150 HKT)
Barclays has been in the spotlight recently, but the rate-fixing scandal which lost its boss his job looks set to reach far further afield.
July 4, 2012 -- Updated 2118 GMT (0518 HKT)
CNN's Richard Quest talks to Lord Levene about the Barclays scandal. Levene says London's culture of money must change.
Read texts and emails between Barclays traders about their often successful attempts to manipulate global benchmarks for interest rates.
July 3, 2012 -- Updated 2107 GMT (0507 HKT)
There are many pieces to the global banking scandal. CNN's Richard Quest explains how they all fit together.
July 5, 2012 -- Updated 1731 GMT (0131 HKT)
Richard Quest says the Libor scandal has confirmed what many of us already knew: There is something smelly in the London financial world.
July 3, 2012 -- Updated 1147 GMT (1947 HKT)
Stephen Hester writes an open letter about the banking crisis, and why, although we may be angry with the sector, we can't give up on banks.
July 2, 2012 -- Updated 2305 GMT (0705 HKT)
CNN's Richard Quest breaks down the LIBOR and explains how this benchmark rate affects the banking system.
ADVERTISEMENT