Jeff Horwich: The chairman of Barclays Bank in London resigned today. Last week, Barclays agreed to pay $450 million to settle allegations — in Europe and the U.S. — that it conspired to manipulate a key interest rate, something called “Libor.”
Here with more is our London bureau chief, Stephen Beard. Hello, Stephen.
Stephen Beard: Hello Jeff.
Horwich: So Barclays’ chairman has resigned, although not the CEO. Is this supposed to bring an end to this episode for Barclays and everyone else?
Beard: Well Barclays would like it to, but as you say, this is a non-executive chairman of Barclays — he doesn’t have a role in the day-to-day running of the bank, although he says ‘the buck stops with me.’ A lot of people here he’s the fall guy, the buck should really stop with the chief executive, the CEO, an American guy called Bob Diamond. Not only does Diamond now run Barclays, he was running the investment banking arm of Barclays at the time this interest rate manipulation took place. So a lot of people here are calling for him to step down — among them, the leader of the Opposition Labour Party, Ed Miliband.
Ed Miliband: I think there needs to be more general change of leadership, including the chief executive, Bob Diamond. But I don’t think it’s enough because people just resigning isn’t really getting to the bottom of what happened, who’s responsible and punishing those who did wrong.
The Barclays chief, Bob Diamond, faces a parliamentary committee on Wednesday, and he’s going to get a pretty rough ride.
Incidentally, several other big international banks are also under investigation — a couple of American banks, it’s believed, are under investigation too.
Horwich: Along with all this, we’ve got some humbling news today for British banks from a magazine called The Banker. It’s put out its rankings of banks around the world. And at least in terms of profits, it shows just how far the European banking sector has fallen.
Beard: That’s right. I mean, the British banks, their share of global banking profits have halved over the past five years. Continental European banks are doing even worse. Of the 25 least profitable banks on the planet, 24 were European. Clearly, this has a lot to do with the debt crisis. Meanwhile, Chinese banks, on the other hand, continue to boom. Chinese banks accounted for only 4 percent of global profits five years ago; today, they account for 30 percent.
Horwich: Stephen Beard in London, thank you.
Beard: OK Jeff.
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