The Banking Saga: HSBC, Del Missier and Mervyn King squirm
London, UK (17/07/2012)
It’s been a dramatic few weeks for banking, as UK and US authorities operate what seems to be a pincer movement on multiple banks. Last night, Jerry del Missier, the former Barclays COO gave evidence to the Treasury Select Committee that conflicted with former CEO Bob Diamond’s testimony from the week before. This morning Mervyn King is being questioned by MPs over the Libor fixing scandal, and in the US, the Senate has accused HSBC of having ‘acted as a financier to drug gangs’. So a pretty messy morning for the global financial industry and what is left of its reputation.
Last night, Jerry del Missier became the third Barclays executive to give evidence on the Libor fixing scandal, and in a blow to former chief executive Bob Diamond, claimed that the latter had instructed him to get the Libor rates down – something Diamond denied to MPs. Del Missier to not go so far as accusing Diamond of lying, but the discrepancy between the two stories has drawn a lot of attention in the media and will not go unnoticed if there is some kind of judge-led inquiry into the scandal at a later date. Diamond maintains that he knew nothing of the rate fixing until just weeks ago, and that the practice was confined to a group of just 14 rogue traders. Hmmm…where lies the truth?
This morning, the governor of the Bank of England, Mervyn King, faced the Treasury Select Committee, answering questions on his economy-nursing techniques (such as quantitative easing) and about just how regularly the Bank spoke to other financial institutions. He claimed this morning that the first he heard of any Libor wrongdoing was when the FSA reports came out just two weeks ago, and that no one in the Bank of England had any evidence of wrongdoing before that point. With his characteristic grabbing of the moral high ground, we reckon the public will be more inclined to believe Merv than the smiling assassin that is Bob Diamond. But this isn’t quite right: the emails between Barclays executives and the deputy governor of the BoE, Paul Tucker are evidence that there was actually a regular stream of communication, and a solid awareness that rate-fixing existed, at the very least in other banks. Perhaps Mervyn has forgotten just how much material has found its way into the hands of the media over the last few weeks…
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