Daily Lessons from Life 02 July 2012 - Barclay's chairman resigns over rate rigging scandal

"Barclay's chairman resigns over rate rigging scandal - ADP 02 July 2012

LONDON: Barclay's chairman Marcus Argus resigned on Monday, saying suspected manipulation of inter-bank lending rates by staff had "dealt a devastating blow" to the reputation of the British banking giant.

Barclay's said Argus, who has chaired the bank for six years, would remain in his post until a successor was found. "I am truly sorry that our customers, clients, employees and shareholders have been let down," Argus said in a company statement, less than a week after the bank was fined over the rate rigging scandal.

Britain's Business Secretary Vince Cable on Sunday backed calls for a criminal investigation into bankers involved in the scandal, which cost Barclay's £290 million ($450 million) in fines.

The true cost of the fallout has been much bigger however, with the bank's market value losing billions of pounds last week following a share price collapse.

Barclay's has remained resilient throughout the crisis, and has worked hard to ensure that today it is a strong, well capitalised and profitable business," Argus said on Monday.

"But last week's events -- evidencing as they do unacceptable standards of behaviour within the bank -- have dealt a devastating blow to Barclays' reputation.

"As chairman, I am the ultimate guardian of the bank's reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside," he added in the statement.

It emerged on Sunday that bailed-out Royal Bank of Scotland (RBS) had sacked four traders over their alleged involvement in the affair, raising suspicions that the practice was widespread.

Prime Minister David Cameron on Friday reiterated his intention to bring Barclay's chief executive Bob Diamond and others at the bank to account. The bank's actions distorted one of the main indicators of its financial health. Diamond was in charge of Barclays' investment arm at the time of the suspected manipulation.

Bank of England head Mervyn King on Friday said Britain's banks needed a "real change in culture" following a series of scandals that rocked the country's financial sector last week.

British regulator the Financial Services Authority on Friday said it had reached agreement with Barclays, HSBC, Lloyds and RBS to compensate clients for mis-selling interest rate hedging products.

Also last week, a severe IT meltdown at RBS left millions of customers unable to complete transactions. RBS chief executive Stephen Hester and Diamond have both said they would forgo their bonuses for 2012 owing to the recent scandals."

Too big to fail OR too big for their own good?

Lessons for me are:

1. bankers are thieves seem to be the order of the day! Of course, only a few of them cheated as only a few of them can reap gigantic financial gain from cheating - at least that was the intention. No?;

2. the word: 'culture' was mentioned a few times. In a corporation, the behaviors of the Leaders have the BIGGEST and GREATEST impact on molding the corporate culture. It is a heavy responsibility that many senior leaders did not seem to realize or simply ignore as it is hard work to 'turn off the golden tap that feed you'!! It is counter-intuitive and unnatural. YET, it is the true leaders who are able to be mindful of his or her own responsibility and resist the temptation and SUCCEED!!;

3. it is good to see that the Chairman took the fall and stepped up to shoulder the blames. I wonder if that 'bright' American who is the CEO of this revered, once anyway or maybe still is being, bank will fare. What will happen to him? Will he take the bullet too or the shareholders and public and whoever interested may cut him some slack and take 1 big casualty, the Chairman, and let him 're-think and re-shape' the culture. Maybe he has become enlightened and do the right things even if it means a smaller or no bonuses!! I await with bated breath!!