Heads Roll After ‘Black Week’ For UK Banks
Employees of state-backed Royal Bank of Scotland have reportedly been sacked as the Libor scandal draws more banks into its grasp, while Barclays traders have been reported to be under investigation by the U.S. Federal Bureau of Investigation.
RBS – facing a 150 million pounds ($236 million) fine over alleged manipulation of the London inter-bank offered rate (Libor) and other interbank lending rates – has sacked “less than a dozen” traders over the scandal, the BBC reported Sunday. The UK government has ordered an independent inquiry into the issue.
Meanwhile, the FBI has opened an investigation into 14 Barclays traders at the heart of the scandal, according to the Sunday Times. Barclays paid a $435 million fine over the allegations last week, as one of the most damaging weeks for UK banks since the beginning of the credit crisis unfolded.
Bob Diamond, chief executive of Barclays, faced calls for his resignation from shareholders who spoke to the Sunday Telegraph, as he prepared to speak publicly on the issue to UK MPs on Wednesday. There is also pressure on Barclays Chairman Marcus Agius, due in front of MPs Thursday, to step down.
Last week was a “black week for the reputation of British banking,” Lord Adair Turner, chairman of the Financial Services Authority, told the BBC Sunday.
He said that the “strengthening of regulation” hadn’t gone far enough, which may fuel fears that the Libor-setting furore, combined with other recent examples of bad behavior by bankers, may lead to a new, tougher regulatory regime.
Business Secretary Vince Cable issued a rallying call to shareholders to boot out executives in the Observer Sunday morning.
“Incompetence, corruption and greed have been endemic in British banking,” he wrote.