Barclays bank ‘sailed close to the wind’ on regulation

2012-07-17 14:06

Britain’s Barclays bank was “sailing close to the wind” when it came to issues of financial regulation and tended to ignore concerns expressed about its behaviour, the governor of the Bank of England (BoE) has said.

Mervyn King told the treasury select committee of the British parliament that there had been “genuine and deep concern” over “governance and a loss of confidence in the bank’s bosses” among regulatory authorities.

However, King said he was not aware about the rate-rigging scandal until the practices at Barclays were exposed at the end of last month.

He said Barclays was “in a state of denial” about its behaviour. Chief executive Bob Diamond resigned over the rigging scandal earlier this month.

King’s comments to the committee came after reports last week that the US Federal Reserve had raised concern over the fixing of the key Libor rate by Barclays as long ago as 2007 – and made them known to King.

The Libor, a benchmark set for millions of financial transactions, is calculated daily in London based on the reports of 18 banks.

It is the average rate for interbank lending, and a crucial reference for many loans in the greater economy.

Barclays was fined £290 million (about R3.7 billion) by British and US regulators earlier this month over attempts to rig the Libor.

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