Diamond Pressured as Barclays’ Agius Steps Down

Agius’s resignation “will do little to appease the many who see Bob Diamond as having primary responsibility,” according to Gary Greenwood, a banking analyst at Shore Capital. Greenwood was quoted saying, “While Agius’s departure will grab the headlines today, the bigger issue remains whether Diamond should also remain.”

Agius, who has also stepped down from his post as chairman of the British Bankers Association (BBA), the industry lobby group that oversees LIBOR, is perceived as unable to rein in Diamond. But he had other problems as well. In 2008 he oversaw the bank’s action to raise more than 5 billion pounds from a group of funds from Abu Dhabi and Qatar, but failed to give existing shareholders the chance to buy new stock. Shareholders including Legal & General Group complained at the time that their pre-emption rights had been ignored; in April of 2009, about 16% of investors protested Agius’s actions by opposing his re-election as chairman.

He has also been criticized for supporting Diamond’s compensation package of 17.7 million pounds, according to the BBC, and after 27% of shareholders expressed their disapproval of that in April, Agius had to apologize to them for failing to clearly communicate the firm’s pay plans to investors.

The bank said that Sir Michael Rake, chairman of the telecommunications company BT Group and senior independent director at Barclays, has been appointed deputy chairman and will lead an audit of its business practices that it described as “a root and branch review of all of the past practices that have been revealed as flawed.” The bank will then assess implications for its practices and culture.

According to documents released in late June, some at the bank were under the impression that Barclays was given permission from the Bank of England (BoE) to submit artificially low LIBOR interest rates after a conversation in October 2008 between Diamond and BoE Deputy Governor Paul Tucker. BoE says that no such permission was given and that Tucker’s recollection of the conversation is substantially different from Diamond’s.

BBA, meanwhile, canceled a party it had planned for later in the week in the wake of the fine against Barclays. In canceling the reception, planned for Wednesday evening, BBA CEO Angela Knight said in a memo, “We regret the short notice but our industry needs to think long and hard about its collective behavior. We believe that in the current circumstances it would be wrong to proceed with the reception on Wednesday evening.”

The LIBOR scandal has already cost Knight her position; in April she said she would step down from the post, and last month the group designated Anthony Browne, a government relations executive at Morgan Stanley, to replace her.

A total of 18 banks are currently under investigation for their role in the LIBOR-fixing scheme, including Citigroup, Royal Bank of Scotland Group, UBS, ICAP, Lloyds Banking Group and Deutsche Bank.

Tracey McDermott, acting director of Britain’s Financial Services Authority, said in the report, referring to Barclays, “I wish I could say this was an isolated case. You will hear more on this in due course.”