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Barclay’s points finger at Bank of England

Barclay’s points finger at Bank of England
Barclay’s Bank has issued an internal memo saying it understood that the British authorities indicated they might approve interest rates manipulation to avoid panic in the markets during the 2008 crisis.

­A nine-page document published on its website Barclays said that the Bank of England and government would back it if banks provide lower interest rates to boost confidence in British banking after the Lehman Brothers collapse. As most banks saw borrowing cost rising during the crisis, keeping them artificially low could avoid giving the impression the banks were in difficulty.

According to the memo the then BoE Deputy Governor Paul Tucker told CEO Bob Diamond he had received calls about the interest rates from senior government officials. So Barclay’s management understood it as an encouragement to lower the costs.

The memo came as a line of defense as Barclay’s outgoing CEO Bob Diamond faces questioning before Britain’s Treasury Select Committee later on Wednesday.

Last week Barclay’s paid a $450 million fine over its involvement in rate fixing case. The bank has lost about $5 billion of its markets value since then, while its Chairman Marcus Agius, CEO Bob Diamond and COO Jerry del Missier have all stepped down.

Meanwhile Barclays said it had cooperated with authorities and had conducted an internal investigation which had taken more than three years and cost more than $156 million. Despite that, the bank said it was "ironic that there has been such an intense focus on Barclays alone, caused by our being the first to settle”.