Traders witness Bob Diamond emerging unscathed as committee puts in a performance as flimsy as a Barclays compliance manual
While the City has long wondered if Bob Diamond’s magnificent coiffeur could retain its hue during a sharp rain shower, few ever doubted the banker’s ability to retain his poise.
He demonstrated that skill again on Wednesday by easing his way unscathed through the Treasury select committee’s hearing, an appearance that very occasionally caused City traders to glance up from their terminals to see how their former colleague was getting along.
David Jones, chief market strategist at IG Index, a City firm that has set itself apart by seemingly avoiding any type of scandal, summed up the mood by saying that Diamond had performed well.
Meanwhile, his futures-dealing colleague, Rupert Osborne, mused: “[Diamond] is a character with huge respect in the City. Has he been unfairly treated? There is a sense that the first one out would get the worst of it … What the Bank of England may or may not have said is the interesting bit … The City was not surprised that Libor did not accurately reflect reality. At the time there was no inter-bank lending. What was submitted were guesses … They got caught lying.”
They’re a tough audience in the City. The Libor saga may have failed to surprise the financial sector, but outside the Square Mile the odd eyebrow has arched. It seems an age away now, but this week began with the resignation of Barclays chairman Marcus Agius. Diamond then quit too, forcing Agius to return to run the bank in the most startling resurrection since Bobby Ewing emerged from the en suite.
Still, the select committee swiftly put an end to all excitement, with a performance as flimsy as a Barclays compliance manual. If chairman Andrew Tyrie – plus committee members Jessie Norman, Michael Fallon and David Ruffley – were supposed to be the attack dogs, investors quickly decided their questions lacked bite.
The longer the quartet probed, the higher Barclays shares soared, with the stock adding around 2% (a performance way ahead of the rest of the market) during the opening hour. It was a magnificent performance on behalf of Barclays shareholders – so bottles of Bollinger to all four of those big boys are on their way.
But like many profitable runs in the City, it didn’t last. The slightly less refined diction of George Mudie appeared to coincide with the share price gains slipping away, although some unkind souls suggested that was merely happenstance. The shares ended the day pretty much where they had been when Diamond greeted his interrogators, which makes one wonder if the City just lost what little interest it had in the proceedings.
Still, there were those in the local bars proclaiming it was all just a “media and political issue going on”, while others moaned that the newspapers’ constant reprinting of pictures of Diamond presenting the Premier League trophy to John Terry has been seriously damaging to the former England skipper’s reputation.
And in a world where everything is viewed as a trade, nobody regarded a fictional exchange of one Bob Diamond for a whole host of select committee members as shrewd.
Elsewhere, one trader pondered if the Libor market may now wither away too. “Unless something is done, the Libor/Euribor market could die,” he suggested. “There are other rates such as repo rates and overnight rates which do actually trade – and are therefore harder to manipulate – which may well take over.”Meanwhile a colleague, who was paying closer attention than most, piped up: “Diamond’s drinking a lot of water. It took seven minutes to drink the first glass.”
That is exactly the kind of attention to detail that the top people at Barclays have always possessed. It’s just the minor points of Libor rigging that tends to pass them by.