No Libor pressure, says Bank deputy

Deputy Governor of the Bank of England Paul Tucker is appearing before an MPs committee

Deputy Governor of the Bank of England Paul Tucker is appearing before an MPs committee

First published in National News © by

The deputy governor of the Bank of England has "absolutely" rejected suggestions he had leant on Barclays to manipulate a key lending rate or that Labour ministers had encouraged him to do so.

Paul Tucker, who is a forerunner for the role of Governor when Sir Mervyn King steps down, told MPs that a record of a contentious phonecall he had with former Barclays boss Bob Diamond about Libor gave the "wrong impression".

Mr Tucker told the Treasury Select Committee that he had intended to ensure Barclays was not "inadvertently sending distress signals" about its financial health at a time when the market viewed the bank as the next in line for a Government bailout.

The deputy governor rejected claims that the then Downing Street chief of staff Sir Jeremy Heywood, then City minister Ed Balls and former Treasury minister Baroness Vadera had asked him to pressure Barclays to lower its Libor submissions.

Labour seized on his comments as proof that Chancellor George Osborne was wrong when he claimed that figures in Gordon Brown's inner circle were involved in putting pressure on the bank and have demanded a public apology.

Barclays has been the focal point for a row over banking culture after the bank was fined £290 million by UK and US regulators for manipulating the Libor, which affects mortgages and loans.

Mr Tucker found himself in the spotlight after Mr Diamond published his account of a phonecall, in which it has been suggested Mr Tucker was encouraging the bank to submit lower Libor submissions in light of concerns from senior Whitehall figures.

Mr Tucker said that concerns about Barclays' submissions existed at the time he spoke to Mr Diamond in October 2008 not only in Whitehall but also in the markets.

After the launch of a package of co-ordinated international efforts to shore up the markets earlier in the month, both officials and markets were monitoring Libor and found that - compared to many other participants which had lowered their submissions - "Barclays continued to pay higher rates in the market, as reflected in their Libor submissions".

The governor said there was concern that Barclays was "next in line" to collapse and require taxpayer assistance after Royal Bank of Scotland and Lloyds Banking Group.

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