Last year, former Barclays CEO Robert Diamond told a British parliamentary committee that the time for banks to apologize had passed. Now he is the face of a sweeping interest-rate manipulation scandal that has implicated not only his bank, but up to 17 other financial institutions.
Diamond resigned as CEO on Tuesday following Barclays' $450 million settlement with US and UK authorities, in which the bank admitted to manipulating the London interbank offered rate, or Libor. Chairman Marcus Agius and COO Jerry del Missier have also resigned. (Agius will remain at the firm until a new CEO is appointed). On Thursday, credit rating agencies Standard & Poor's and Moody's Investors Service lowered Barclays to a negative outlook, which could lead to a reduced rating.
Barclays' trouble concerns the entire banking industry. Other major banks including Citigroup, JPMorgan Chase & Co., HSBC Holdings, and Deutsche Bank are under investigation for trying to rig Libor, and a dozen firms have already fired or suspended traders in connection with the practice.
In testimony before Parliament on Wednesday, Diamond said that between 2005 and 2009, “a number of banks were posting rates that were significantly below ours that we didn't think were correct.” UK Financial Services Authority chairman Adair Turner said this week that more settlements with banks could happen “before the end of the year.”
The scandal comes at a time of record-high distrust in US banks. A recent Gallup poll found that 36% of Americans have very little to no confidence in banks, up from 30% last year and the highest percentage on record.
As Barclays executives have found, the period of remorse for banks is far from over. The industry still has a long way to go in rebuilding trust among consumers and stakeholders.