Barclays chief gets £9 million payoff as EC threatens to make Libor rigging a crime

 missier-barclays.jpg
Former Barclays COO who admitted sanctioning Libor manipulation
received a £8.75mn payoff

Scottish newsBarclays chief gets £9 million payoff as EC threatens to make Libor rigging a crime

Barclays deputy Jerry Del Missier has received an almost £9mn payoff after his resignation following the Libor scandal revelations surroundings Barclays. The news comes at the same time as the European Commission has proposed making interest rate fixing a criminal offence.

Mr Del Missier, who resigned after telling traders to reduce the firm’s Libor rates during the height of the October 2008 financial crisis, has been awarded an £8.75mn settlement.

Labour member of the UK parliamentary committee into banking ethics, Andrew Love said:

"In the light of the circumstances in which Mr del Missier left Barclays it is totally inappropriate that he should be rewarded with a substantial payoff. Since he was the trusted lieutenant of Bob Diamond you would have thought he would have taken a similar stance to Bob Diamond”.

The move has occurred as the European Commission announced its intention to eradicate the manipulation of Libor and other benchmarks, such as the  Euro Interbank Offered Rate (Euribor) by making such rigging a criminal offence in the same category as insider dealing.

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Internal Market and Services Commissioner Michel Barnier said:

"The international investigations underway into the manipulation of LIBOR have revealed yet another example of scandalous behaviour by the banks.

“I wanted to make sure that our legislative proposals on market abuse fully prohibit such outrages. That is why I have discussed this with the European Parliament and acted quickly to amend our proposals, to ensure that manipulation of benchmarks is clearly illegal and is subject to criminal sanctions in all countries."

Questions over Mr Del Missier’s settlement have arisen as the his payoff juxtaposes that of former Barclays CEO Bob Diamond – who was forced to give up bonuses of around £20m earlier this month.

The bank’s chairman Marcus Agius, is next to face questions over Mr del Messier’s payoff.  Mr Agius is also to leave the banking firm and is due to present details of the bank’s half-year profits on Friday.  

The European Commission proposes that benchmark rates manipulation, such as happened with Libor scandal, will become a criminal offence in order to ”tackle this type of market abuse”.  Justice Commissioner Viviane Reding said the move would help restore public confidence that took a nose-dive after the revelations about rate fixing practices.

"Keeping Libor artificially high or unusually low is a scam" argued Reding after criticising the Bank of England’s failure to act more quickly in regulating these matters. The commissioner suggested all member states should have a greater monitoring role on market dealing and manipulation. “Banks should "no longer be able to behave like casinos” she said.

Arlene McCarthy MEP, also a member of the parliament's economic and monetary affairs committee, added: "Fines have proved ineffective and have not changed the culture in the banking industry. We must therefore look to criminal sanctions as a penalty and deterrence for this rogue behaviour."

Brussels will seek a swift agreement between EU governments and the European Parliament about the criminal crackdown launched yesterday, urging countries to react to prevent a repeat of the scandal. Reding also suggested the European Central Bank could become the supervisor in a threat to Britain which wants to retain autonomy in policing finance.

The Libor scandal has taken on a political dimension after it was reported that Barclay’s now former chief executive Bob Diamond said Paul Tucker,  deputy governor of Britain's central bank, had called him in October 2008 to relay concerns from within government about the level of Barclays' funding costs.

As the Commission investigates the involvement of banks in fixing Libor and other interest rates, Brussels-based interest rate index Euribor today distanced themselves from the conduct of their UK counterparts, insisting that the Euribor could not have been rigged like its London equivalent.

Barclays funding Romney’s election campaign

Barclays has received separate scrutiny from MPs who have questioned the bank over why its executives have donated more than $1mn to the presidential campaign of Republican presidential candidate Mitt Romney, who was visiting London today.

Last week, 11 MPs signed an early-day motion, telling the bank and its executives to stop contributing to Mr Romney’s campaign and instead begin to repair public trust following the continuously unfolding Libor scandal.  

Mr Romney is currently in the UK’s capital to shake hands with top British political figures, and to attend a fundraising dinner, of which tickets cost between $50,000 and $75,000.

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published this page in News 2012-07-26 16:21:00 +0100