Bank of England deputy governor Paul Tucker has rejected the idea that a conversation he had with ex-Barclays chief executive Bob Diamond could have been taken as an instruction to lower its Libor rates.
Last week, the Bank of England was dragged into the Libor scandal when Barclays released a memo claiming Tucker had told Diamond in 2008 that a number of “senior Whitehall officials” had expressed concerns over the Libor numbers being reported by Barclays.
The memo was sent by Diamond to John Varley, who was chief executive at the time, and Barclays chief operating officer Jerry del Missier, who resigned last week in the wake of the £290m fine handed down to Barclays for rigging the Libor and Euribor rates.
Giving evidence to the Treasury select committee this afternoon, Tucker was asked by TSC chair Andrew Tyrie whether he would “categorically refute” the suggestion the conversation could have suggested he was inviting Barclays to lower its submission.
He said: “Absolutely…….. [To reflect what I said to Diamond, his memo should have said] something along the lines of are you ensuring that you as senior management of Barclays are following the day to day operations of your money market desk and your treasury? Are you ensuring that they do not march you over a cliff inadvertently by giving signals that you need to pay up for funds?”
Diamond’s memo said: “Mr Tucker stated the levels of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.”
Tucker said he wished he had taken a proper note of the conversation but had not because of the pressure at the time due to the unfolding financial crisis.
Diamond told MPs last week that he did not take the conversation to be an instruction and that he was unaware that when he sent a memo detailing the alleged communication with the BoE to other senior staff it was taken by them as an instruction.
Last week Diamond said he took “senior Whitehall officials” to mean ministers but did not give any names.
Today, emails released by the Bank of England show Tucker and Jeremy Heywood, then chief of staff at Downing Street, discussed Libor on a number of occasions in October 2008. Tucker told MPs he also spoke to Tom Scholar and Nick McPherson at the Treasury and John Cunliffe at the Cabinet Office.
The Bank emails do not suggest he put pressure on Diamond to lower Barclays submissions.
Diamond told the committee last week he thought Tucker’s alleged comments indicated concern Barclays may be having trouble raising funding and could need state assistance.
Alistair Darling, who was Chancellor at the time, and Ed Balls, who was Education Secretary at the time, but was close to the then Prime Minister Gordon Brown, have both denied they had anything to do with the calls to the Bank of England.