September 30, 2023

Libor scandal: Paul Tucker denies ‘leaning on’ Barclays

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Paul Tucker

The deputy governor of the Bank of England (BoE) has said he did not give Barclays instructions to lower its Libor submissions in 2008.

Paul Tucker said no government minister had asked him to “lean on” Barclays over its inter-bank lending rates.

But he also told MPs that the BoE and the government feared that Barclays may need a bailout.

Ex-Barclays boss Bob Diamond’s account of a conversation between the two gave “the wrong impression”, Mr Tucker said.

That telephone conversation, which took place on 29 October 2008, has come under much scrutiny.

Mr Diamond’s note of the call concluded by saying Mr Tucker had stated that “it did not always need to be the case that we appeared as high [with Libor submissions] as we have recently”.

Mr Tucker told the Treasury Select Committee that, unlike Mr Diamond, he had not made a note of the conversation. “Sitting here, I greatly wish I had taken a note of it,” he said.

“I think the last sentence gives the wrong impression,” he said.

“It should have said something along the lines of: ‘Are you insuring that you, the senior management of Barclays, are following the day-to-day operations of your money market desk, your treasury, are you insuring that they don’t march you over the cliff inadvertently by giving signals that you need to pay up for funds?'”

Mr Tucker said that Mr Diamond’s resignation from Barclays last week was the right decision, as “absolutely decisive action was needed to start a new chapter”.


While he said the BoE did not think Barclays was “doomed” in 2008, Mr Tucker said there was “anxiety” about the bank’s funding position.

He said there was concern that after RBS, HBOS and Lloyds had to be bailed out by the government in the middle of October 2008, Barclays could be “next in line”.

At the time, Barclays’ submissions of its borrowing rates were higher than those of other banks. Mr Tucker claims that he was warning Mr Diamond that Barclays risked spooking investors to such an extent that they might find the market became closed to it.

BBC business editor Robert Peston said the BoE deputy governor was telling Mr Diamond to get a grip on Barclays’ dealing desks, to prevent it becoming the next big bank of the time to be semi-nationalised.

Mr Tucker said he was not aware of any Libor manipulation at the time, but now realised the Libor market was a “cesspit”.

Emails released earlier on Monday revealed that the BoE had almost daily contact with Barclays over inter-bank lending at the end of October 2008.

At this time, during the height of the financial crisis, Barclays was trying to manipulate Libor rates by submitting lower borrowing rates.

These rates, submitted by a number of banks, go into calculating the daily Libor, or London inter-bank lending rate, which is the basis for millions of daily financial transactions.

‘Absolutely not’

Mr Tucker, who had last week requested a hearing with the Treasury Select Committee “as soon as possible”, was asked if any government official or minister in 2008 had asked him “to lean on” Barclays or any other bank to lower their Libor submissions.

Specifically, he was asked about Shriti Vadera, an adviser to then-Prime Minister Gordon Brown, and shadow chancellor Ed Balls, who was then a Labour minister.

His response each time was “absolutely not”. He added: “I don’t think I spoke to Shriti Vadera throughout this period at all.”

He said that one of the “senior officials” he had spoken to about Libor was Cabinet Secretary Sir Jeremy Heywood. He said the person he had spoken to most at Whitehall was Tom Scholar at the Treasury.

Chancellor George Osborne had said last week that Mr Balls had “questions to answer” over the Libor scandal, although he has now said that his Labour counterpart was not personally involved in the scandal.

Labour’s Chris Leslie, shadow financial secretary to the Treasury, said: “It is now crystal clear that the allegations he threw around were completely wrong and without foundation.”

He called on Mr Osborne to “publicly withdraw these false allegations and apologise”.

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