Shareholders, pension funds and powerful business groups yesterday ratcheted up the pressure on Barclays boss Bob Diamond and chairman Marcus Agius to quit as they became tainted by yet another scandal.
As Barclays came under fire from all quarters, analysts warned the bank had reached a ‘tipping point’, claiming the threat of litigation from customers and rival banks could saddle it with huge legal costs.
Yesterday Barclays, along with Royal Bank of Scotland, Lloyds and HSBC were found guilty of mis-selling toxic loans to small businesses and ordered to pay compensation.
This follows the £290m fine on Wednesday by US and UK regulators for rigging crucial LIBOR interest rates used to set loans and mortgages, as well as trillions of pounds in complex derivatives.
City big hitters yesterday made it clear that Diamond’s decision to give up his bonus would not be enough, warning he and his fellow bank bosses should start paying with their jobs.
Simon Walker, director general of the Institute of Directors, said: ‘It is high time for a clear-out of the leaders who created this mess, and they should be replaced with new blood.’
Public disgust at Barclays’ reputation for ‘casino’ banking spilled over to the City, with leading shareholders demanding answers from the Barclays boss over the interest rate rigging scandal.
A group of big pension and insurance funds are pushing Barclays to dump Diamond – formerly the boss of the investment bank – as part of a wider move to scale back its ‘casino banking’ activities.
Barclays is also thought to be under pressure to bring forward the retirement of its chairman Marcus Agius in a bid to appease angry shareholders.
It is believed Agius had planned to announce his retirement from Barclays at some point later this year in a bid to give the bank time to find his successor before he left.
An official in charge of boardroom behaviour at one of the FTSE’s major institutional investors said: ‘There are urgent questions about the tone set from the top of Barclays Bank, and that includes the chairman, chief executive and non-executives.What was the chairman doing in all of this? It’s probably time he was retiring.’
Jane Coffey, head of UK equities at mutual Royal London Asset Management, added: ‘If this is a few rogue traders then Diamond’s job is not on the line, but it doesn’t look as if it was just rogue traders.
‘If it’s a serious failing of culture within the organisation that he was in charge of, giving up his bonus is probably not enough.’ Analysts at Oriel Securities warned Barclays could face a ‘litigation minefield’ over the latest scandals, which could be a ‘tipping point’ for the bank.
Vivek Raja said: ‘It’s a potential litigation minefield.
‘Barclays could be flooded with law suits from retail and small business customers claiming for mis-sold loans and mortgages linked to LIBOR.
‘Even if the success rate of claims is low, the cost of processing claims could be significant.’
There are growing fears that the fixing of interest rates could have hit UK pension funds which invest in these complex investments.
Pension funds headed by lobby group the National Association of Pension Funds questioned whether they have lost out as a result of the manipulation of LIBOR.
Sir Roger Carr, president of business lobby group the CBI, said: ‘The weakness must be addressed and the culprits punished.
‘We should be mindful, however, of the importance of banking to the UK economy and that throwing the baby out with bathwater is in no one’s interest, providing the baby is clean.’