Libor scandal: del Missier to face MPs

Two more key figures in the Libor rate-fixing scandal will be questioned by MPs later on Monday.

Jerry del Missier, who recently quit as Barclays chief operating officer, will appear before the Treasury committee.

Mr del Missier told staff to cut Libor interest rate submissions following a misunderstanding over a note sent from his then boss, Bob Diamond.

He will be followed by Lord Turner, chairman of the Financial Services Authority (FSA).

Last month, Barclays suffered penalties of £290m after it admitted trying to manipulate Libor from 2005 to 2009.

MPs will ask Mr del Missier how he managed to misunderstand a crucial email from his boss, Bob Diamond, in 2008.

The email summarised a phone call between Mr Diamond and Paul Tucker, deputy governor of the Bank of England.

It appeared to suggest that the Bank might turn a blind eye if Barclays reduced its high Libor submissions, to avoid appearing under financial stress at the height of the international banking crisis.

This email apparently led Mr del Missier to tell senior Barclays managers to submit artificially low figures to the British Bankers' Association (BBA), as part of the daily process of setting the various Libor (London inter-bank offered rate) interest rates at the time.

The Libor rates are used to price trillions of dollars worth of deals between banks and other financial companies, as well as being used as the benchmark for pricing loans to businesses, as well as some mortgages.

MPs will want to know:

On Friday the bank sent an email to its staff suggesting that in due course other banks would be punished for their role in the scandal, which is being investigated by financial authorities in several countries including the US.

When the former chief executive of Barclays, Bob Diamond, appeared before the committee earlier this month, some of the MPs subsequently complained that he had tried to pull the wool over their eyes and had given less than frank answers.

However, many commentators pointed out that the MPs had been inadequate in their questioning and had failed to probe hard enough to uncover any new information about how the Libor scandal had occurred.

Lord Turner and two other senior officials of the FSA will also be questioned by the MPs.

The committee members will want to know for how long the authorities have been aware that Libor had been subject to manipulation, and who else is likely to be punished.