Post date: Jul 02, 2012 3:31:7 PM
Britain's parliament is to investigate the interest-rate fixing scandal which has rocked London's banking sector and the reputation of Barclays, the UK's third-biggest lender, in a wide-ranging inquiry which will take a look at culture and standards in the industry. Joanna Partridge reports
LONDON, ENGLAND, UNITED KINGDOM, ( UK PARLIAMENT) -They've already sacrificed their chairman - but the pressure on Barclays isn't easing.
Marcus Agius' resignation hasn't taken the heat off CEO Bob Diamond who was running Barclays' investment banking arm when the manipulation of the inter-bank lending rate took place.
Diamond told staff in a memo on Monday he was disappointed "many of these behaviours" happened on his watch and said it was his responsibility to make sure they didn't happen again.
The reputation of Britain's third-biggest bank has been badly damaged by the scandal.
And Prime Minister David Cameron has now ordered a full parliamentary inquiry into the rate-rigging.
SOUNDBITE: David Cameron, British Prime Minister, saying (English):
"We need to take action right across the board. Introducing the toughest and most transparent rules on pay and bonuses of any major financial centre in the world, increasing the taxes must bank, ensuring tough civil and criminal penalties for those who break the law."
The revelations follow a string of other bad banking stories which have diminished the global standing of some long-established British and European institutions.
The Banker magazine has just published its annual survey of the world's 1000 top banks.
While American banks still dominate, HSBC is the only European one left in the top ten - as the region's lenders face tough competition from Chinese banks.
Brian Caplan edits the magazine. He believes this is the worst banking scandal we've seen since the 2008 financial crisis.
SOUNDBITE: Brian Caplan, Editor of The Banker, saying (English):
"We've seen individual institutions go bust you know like Lehmans and Bear Stearns and we've seen scandals at individual institutions like you know insider trading or we've seen mistakes on the JP Morgan trading desk for example, but this is on another level of scandal really because this affects Libor which is like an inter-bank interest rate which the whole world was using."
British banks are facing a raft of new regulations, brought in since the financial crisis.
Caplan welcomes the reforms but fears this latest scandal won't just damage Barclays.
SOUNDBITE: Brian Caplan, Editor of The Banker, saying (English):
"Perhaps a nail in the coffin is putting it too strongly, but it's another piece of bad news for London as an international financial centre."
In recent years, many have criticised the culture within banks and how risk-taking was rewarded.
Alongside the UK inquiry, authorities around the world are investigating more than a dozen other lenders.
The Barclays affair is unlikely to be the last banking scandal.
Joanna Partridge, Reuters