Libor scandal: Bob Diamond's letter to Barclays staff
- 2 July 2012
- From the section Business
Barclays' chief executive Bob Diamond has written to members of staff at the bank, days after it was fined a record amount for attempting to rig important inter-bank lending rates.
Here is the letter in full:
It has been an incredibly tough period for all of you given the nature and volume of negative comment that has come against Barclays in the past few days.
It must have been particularly hard for those of you on the front-line, given our customers and clients will understandably feel that we have let them down.
You need better information to help in your interactions with customers and clients - and our family and friends.
Let me start by saying that I understand why the reaction has been severe. No one is more sorry, disappointed and angry about these events than I am.
I am sorry because we let down the people whose trust we rely on - our customers and clients; our shareholders; our regulators; and the communities in which we live and work.
I am disappointed because many of these behaviours happened on my watch. It is my responsibility to make sure that it cannot happen again.
More than anything, though, I am angry because the impression has been given that the behaviour revealed in the documents last week is indicative of the culture at Barclays generally.
I love Barclays, and I am proud of all of you. We all know that these events are not representative of our culture, and it is my responsibility to get to the bottom of that and resolve it. Make no mistake the actions taken in this incident were against all of the principles we live by.
Many have rightly stated that there are questions that we have to answer. Many of you will rightly feel the same given the impact this has had on you.
Detailed answers will continue to come. You have my commitment on that.
Meanwhile, we are not standing still. I was restricted from seeing the full findings until just before they were published last week. Since that time I have worked with the Executive team and the Board to determine and drive execution of the further changes we must now make.
We can and will restore Barclays reputation to the levels that the institution and you deserve.
First, we had to get to the bottom of what happened, why and how it happened and put in place changes to make sure that nothing like it can ever happen again at Barclays.
It is important to bear in mind that this behaviour stopped nearly three years ago. The documents released last week represent part of an industry-wide investigation and are the result of investigations which we carried out in cooperation with three different regulatory Authorities over three years.
Those investigations studied millions of pieces of evidence, many hours of interviews and careful review of all aspects of the behaviour under question. All of that is the result of our very close cooperation with the Authorities, which they emphasise.
We did not wait for those investigations to be completed, however. We moved to fix issues when they were uncovered - the systems, controls and training that we now have in place around the submission of LIBOR and EURIBOR are first-class.
We have agreed with the Authorities to have our controls related to the submission processes externally audited on a regular basis. We will also publish the results of that external audit.
Our customers and clients are particularly concerned about the potential impact of this behaviour on them. Let me be clear: it does not matter if this was perpetrated by one individual or a handful - it was wrong.
But we must help our customers and clients recognise that on the majority of days, no requests were made at all. Even when made, the requests were not always accepted by the submitter, and the attempted adjustments were, on average, small - typically less than one basis point. When the ultimate rate was affected is a complex question, especially given the role of the other banks' submissions. This helps explain why the Department of Justice concluded that the rate was affected only on "some occasions". All of that said, I appreciate that some clients will be concerned that there may be an impact on them. We are setting up a dedicated process to ensure that any client concerns can be dealt with consistently.
Second, we have to take appropriate action against those involved.
Of course, given the nature of the Authorities involved, the investigations were accompanied by criminal enquiries, and some of those are still underway.
Our internal disciplinary process, which began some time ago, will be completed swiftly now that the regulatory reviews are complete.
We are being thorough and robust while also ensuring that we undertake due process. We are reviewing those directly responsible and those in supervisory roles. We have the full range of tools at our disposal, from clawing back compensation to asking people to leave the bank. The Board is overseeing this entire process.
Third, we need to continue to build an industry-leading control environment across everything that we do.
The events revealed last week arose in large part because we did not have appropriate controls in place. Frankly, we misjudged the risk associated with the underlying activity. That must never happen again. Once we better understood the risks, we put in place the right controls and systems.
More generally, our efforts to make our operational and functional activities more integrated and independent of the businesses are vitally important. Those will improve control and drive more consistent standards, as well as improve efficiency.
We have much more to do here, and you can expect to hear more from the Executive team over the coming weeks.
Fourth, and most important, we must evolve our culture to a consistently high standard.
As I said at the start, I love Barclays. That is because of you; you make this a great place to work for me. It is my responsibility to make this a great place to work for you.
I do not accept the view that the behaviours revealed this week are representative of our culture. They are not.
But I do recognise that our culture, and that of the industry overall, needs to evolve. The financial crisis revealed that banks need to revisit the basis on which they operate, and how they add value to society.
We know that a small minority have let us down. We also know that we need to rebuild bonds of trust with the society we serve.
We began that journey some time ago, and different businesses are at different places on it. Our efforts here are about accelerating the change that we already have underway and creating consistent standards across all of our businesses.
In particular, we have redefined our purpose and begun to re-orient our business activities around clear principles:
• Consistently putting customers and clients' interests at the heart of everything that we do - striving to improve the service that we provide; making responsible decisions in how we manage our business; and actively managing the social and environmental impacts of what we do.
• Playing an even broader role in the communities in which we live and work through community investment programmes and the direct efforts of our colleagues.
• Supporting economic growth and job creation by operating a strong, profitable business that is focused on helping individuals, businesses, institutions and governments pursue their goals.
We have also been pushing to create One Barclays. Some still misunderstand that to be about organisational structure. It is not. It is entirely about culture and values - we must have one consistent set of standards to guide behaviours across the entire organisation. There will be no exceptions.
Prior to this week, all of that may have been sufficient. It is no longer.
We must move further and faster to show that banks, and those who work for them, consistently operate to the highest standards of probity and honesty. Every day we are trusted with billions of pounds of our customers' money. Every day we must demonstrate that we deserve that trust.
The burden of proof externally is now much higher. Not only do we have to continue to make the right changes to our culture, but we also have to prove to external stakeholders that we have done so.
The Board has agreed to launch an audit of our business practices.
This audit will be led by an independent third party reporting to Sir Michael Rake and a panel of Non-Executive Directors.
It will have three objectives:
• To undertake a root and branch review of all of the past practices that have been revealed as flawed since the credit crisis started and identify implications for our business practices and culture going forward;
• To publish a public report of its findings;
• To produce a new, mandatory code of conduct that will be applied across Barclays.
We will use the output of that review to adjust our HR processes so that the standards that emerge play a material role in hiring and induction; assessment and development; and reward. That will start with Executive Management.
We will establish a zero tolerance policy for any actions that harm the reputation of the bank.
We will also put in place an enforced governance process to ensure that we comply with these standards over time.
I am committed to ensuring that the recommendations from this review are implemented in full.
The actions that I have laid out are by no means an exhaustive outline of the change that we need to undertake to restore Barclays reputation and standing with our stakeholders. We will learn a lot as we progress on this journey.
All of us, most importantly me, serve our shareholders at the discretion of the Board. So their support for this plan is vital.
In that regard, let me share a few words about our Chairman, Marcus. He has shown a remarkable passion for Barclays and its people. He has been a thoughtful and supportive colleague to me in all of my roles - especially since I became Chief Executive last year - and for this I will always be grateful. As you know, he has been an outstanding leader of the Board at all times, particularly during the financial crisis, and he and his Board colleagues have had an extraordinary range and number of challenges to deal with over the past six years.
Marcus has demonstrated hands on interest in, and practical support for, all we do with our customers and clients. In particular, he and his wife have travelled to all corners of Barclays operations to see colleagues, clients and community projects. In leading our Citizenship Awards each year, he has championed the extraordinary commitment of our staff to the communities in which they work, as well as their efforts inside and outside Barclays.
Nothing is a better demonstration of these qualities than his statement today which deserves all of our respect.
I have reviewed the actions that I set out above in detail with Marcus and the other Non-Executive Directors. We have their full support, so it is now our responsibility to execute.
This is a great bank; full of great people. We will emerge from this period as industry leaders in every sense of the word.
That is my commitment to you.