More Bankers Must Resign!

Marcus Agius Esq., Chairman,
Barclays PLC,
1 Churchill Place,
London, E14 5HP
May 9th 2012

Dear Marcus
FSA’s Final Notice Report 27/6/12 – Reinforces Fundamental Tracker IM’s views on remuneration and corporate governance
We appreciate you are pre-occupied with responding to the findings of the recent FSA report detailing Barclays Bank’s misdemeanours in the Libor and Euribor markets. When the dust has settled we believe it is worth revisiting our original suggestions on the appointment of shareholder representatives to the board of the company. In the light of the FSA report it is also imperative to reconsider the whole structure and philosophy of the existing remuneration policy.

Having read the above report it is hardly surprising Barclays has received a poor reception in the press. It is unclear how much responsibility rests with top management, though elements of “senior management” are mentioned in the report as having been aware Libor/Euribor submissions were “manipulated”. Compliance also seem to have been ineffectual despite being informed by Submitters of inherent conflicts of interest, and failing to react. The FSA suggests systems and controls were not improved despite Compliance being told to review them.

The management does deserve credit for being willing to co-operate fully with the FSA, and this has not been recognised adequately by the press. The report indicates clearly that many other banks were involved and have systematically manipulated interbank rates during the period under review. One can only wait to see if the scale of their fines puts Barclays in a better light. It also remains uncertain whether Barclays actually succeeded in manipulating the rates and thus faces a potential litigation risk.

We would also compliment the executives on their willingness to forgo this year’s bonus. We do feel strongly, though, that this incident vindicates our views on the need for a complete restructuring of remuneration policy. The emphasis on bonuses, especially short-term bonuses for traders, puts employee interests at odds with the longer term reputation of the bank and the integrity of its service to its customers. The senior management can set the example by making its remuneration truly long term. The FSA analysis refers back to 2005 through to 2009. It is now 3 to 7 years later that the chickens are coming home to roost. As any banker will admit, similar lengths of time are often needed to test the real profitability of corporate lending or, with hindsight, products such as PPI.
With this in mind one might expect the long term bonuses (LTIPs) due to mature at Barclays over the next few years to be revisited, especially as they are potentially significantly larger than the annual bonuses sacrificed this week by the 4 executives (the FT claims £6.75m ‘v’ £3.38m in 2012 for the CEO). The events described by the FSA suggest profits may have been overstated in the early years of these 3 year schemes and thus RoRWA figures should be recalculated (also taking into account any fines or legal compensation). These LTIPs should in future cover a minimum of 5 years and include our earlier suggestions on appropriate benchmarks (RoE adjusted for debt, peer group TSRs etc).

Desperate times require radical solutions. We feel this is the time to make the necessary changes to NEDO and remuneration policy. Having been the first to come clean over interbank rates, perhaps Barclays could lead the field in addressing these serious corporate governance issues. We think shareholders should be represented on the board and thus monitor the management of their risk capital.

Yours sincerely

Could you add the Bank of England (Governor please), FSA and any Labour MP linked to the Treasury during that period (Brown, Balls, Darling, etc) to the list of who needs to resign or be prosecuted. They were the gate keepers, it happened on their watch and yet their silence is deafening.

Barclays chief executive Bob Diamond has resigned with immediate effect.

The move follows the resignation of chairman Marcus Agius and comes less than a week after the bank was fined a record amount for trying to manipulate inter-bank lending rates.

Mr Diamond said he was stepping down because the external pressure on Barclays risked "damaging the franchise".

The prime minister has described the rigging of Libor rates as "a scandal".

By the way don't cry for Sir Bob or Marcus, they have plenty of other directorships to keep the money rolling in and will anyway reappear like a well sacked football manager at some other company...

Do I have the wrong idea of the typical duties and responsibilites of a non-exec chairman and a CEO?

The order of the resignations seems to imply to me that ineffective monitoring is deemed worse than alleged complicity in wrongdoing.

AFAIK LIBOR has always been a glorified fix anyway. The only surprise is the surprise.

As for this scandal spreading wider - I'm no expert, but surely under the calculation criteria, in order for the fix to be effective, Barclays would have to be confident that their LIBOR submissions would fall in the middle of the range, since the extreme submissions are disregarded. Since we're talking about an extremely narrow range, that would suggest a rather cosy relationship with other submitting institutions...

Marcus Agius, who announced his resignation on Monday in an attempt to conduct anger away from the bank and its chief, will stay on as full-time chairman and lead the search for a new chief executive.


so when you resign you can still pick new chief executive

are they SANE?

its still a boys club

B.O.E

might be in the soup tomorrow

RESIGN? They should be sacked and subjected to criminal prosecution!

There are a number of ponts or principles that can be taken from this:

1. When there is something of value at stake, self-regulation or light-touch regulation does not work. In the case of bankers, they could not keep their hands out of the till. In the case of our political masters (servants?!), they gorged on expenses. It is in the human DNA to take what one can. In the past society, one's honour and sense of morality prevented excess on such a dramatic scale - in today's world this no longer is the case. Proper regulation is now required.

2. A penalty of £290m (less than 1 months profit) is just a slap on the wrist and are not a serious deterrent. The penalties need to be significant - £2.9bn will make the shareholders sit up and take notice. The FSA needs proper powers.

3. In spite of committing fraud (this is what this amounts to, if one looks at the definition of fraud), it is unlikely that anyone will be criminally prosecuted in the UK. This has to change.

As a business consultant, I see employees subverting business processes and business systems if it makes their lives easier (Rule 101: "All system users are lazy") or if they can make themselves look better or get something out of it (Rule 102: "All systems users are devious"). Bankers and politicians are just users of another flavour.

I am so glad I do not bank with Barclays - I use two great banks Co-op's Smile Internet bank and Nationwide. To think Bobby boy Diamond is going to get a package worth 30,000,000 pounds. Shareholders and customers are like sheep being led to slaughter.

Diamonds arent forever

Before anyone jumps to any conclusions about criminality, may I suggest that we await the outcome of an independent inquiry, In English law, you are innocent until proved guilty and, whilst the activities of a number of people in the banking world appear to have been highly irregular to say the very least, let us not resort to mob rule and hyperbole and, in that process, denigrate the vast majority of decent hardworking people employed in the banking industry and financial world generally. I accept without question that there needs to be a very thorough root and branch clearout in some quarters but let us not forget that the City as a whole generates an enormous amount of income and employment and consequently taxation for the public coffers, and anything that fundementally upsets the balance could have disasterous consequences for not just this countries' deficit reduction programme but its standing in the world as a leading financial centre. I really am convinced that even our politicians understand the seriousness of the situation and that the shake-up that will take place now will go a long way to preventing a repetition of this Libor scandal and other longstanding abuses and will result in the full weight of the law being applied to the guilty fraudsters. Hopefully we will also see the Vickers Report recommendations being enacted upon without delay. This won't be a panacea for all our problems but if the criminal law can be made to be a serious and punitive deterrent, many of those tempted to break the rules (and the law) will think very long and hard before risking the possibility of a a lengthy custodial sentence. I think now is the time for cool heads not mob rule. The dangers to this Country are far to great for that.

Of course they and many others should resign, but the real need is for prosecutions.
Fraud Act 2006 Section 2:
" 2 Fraud by false representation.
(1) A person is in breach of this section if he— .
(a) dishonestly makes a false representation, and .
(b )intends, by making the representation— .
(i) to make a gain for himself or another, or .
(ii) to cause loss to another or to expose another to a risk of loss. .
(2) A representation is false if— .
(a) it is untrue or misleading, and .
(b) the person making it knows that it is, or might be, untrue or misleading. .
(3) “Representation” means any representation as to fact or law, including a representation as to the state of mind of— .
(a) the person making the representation, or .
(b) any other person. .
(4) A representation may be express or implied." .

http://www.ukcolumn.org/article/roger-hayes-arrested-tried-secret-court-imprisoned


When you see how quickly offenders can be dealt with under the British legal system, why is it taking so long for the SFO and/or CPS to deal with obvious criminality in the banking system?

Could it be that some criminals have friends in high places?

Wow, all this banking bashing but I have yet to see any comments on the Fool or its members regarding the $3 BILLION fine that GSK is paying for selling unecessary drugs in the USA. Where is the public outrage? Why is the Fool not bashing one of their favourite picks? And while we're venting public rage at people like Jimmy Carr, why is Alex Ferguson not dragged through the mud in the press for tax avoidance?

I don't think the Government will do anything about these corrupt Bankers because, a couple of years ago, Directors of a business that about fifty people worked for (including myself), were lied to about the state of that company.

Then, those unscrupulous Directors simply used holes in Employment law to withhold staff wages and ultimately cheat employees out of the money that they had worked hard to earn ( http://bobblackmanmp.info/ ).

Now, despite Employment Tribunals agreeing that staff were treated badly, the High Court tells us that they are powerless to help because of the way that the law has been written.

But, to rub salt in the wound, the local MP and his Government officials simply dodge the issue by claiming that it is not in the public interest to do anything about this matter, whilst refusing to have the Directors struck off, failing to introduce new laws to outlaw these kinds of sharp practices, and not even bothering to call for an inquiry into this scandal.