Wounded and cornered, Bob Diamond submits to parliament

By Ian Dunt

Bob Diamond agreed to appear before an influential parliamentary committee last night, as critics from politics and the business world rounded on the beleaguered Barclays boss.

The news comes as the banking sector was hit by another scandal this morning, with the Financial Services Authority (FSA) concluding lenders mis-sold interest rate swap arrangements (Irsas) on small businesses, thereby landing them with spiralling costs.

"Given the nature of the behaviours uncovered through these investigations, questions of accountability have rightly been raised," Diamond wrote to Treasury committee chair Andrew Tyrie last night, after he was summoned to appear before it.

The Barclays boss admitted that forgoing a bonus, paying fines, apologising and disciplining individuals was not enough to restore the bank's reputation after it was found to have manipulated the interbank lending rate Libor.

"We need to work every day to rebuild the trust that has been damaged by these actions and others that have come before them," he wrote.

The scandal is unlikely to stop there. The Serious Fraud Office is now in talks with the FSA and many legal observers are hoping for criminal charges to be brought.

Others expect the twin rows and the ensuing political fallout to make wholesale banking reform irresistible.

Even the Financial Times demanded Diamond's resignation today, in a front page editorial which will make his position next-to impossible.

"Mr Diamond may not have been the top boss at the time, but he was clearly responsible for its hard-driving culture," it reads.

"If he had an ounce of shame he would immediately step down."

Yesterday saw figures from across Westminster – including David Cameron, Ed Miliband and Vince Cable – issue increasingly robust statements against the Barclays boss.

"People have to take responsibility for their actions and show how they’re going to be accountable for those actions," the prime minister said.

"It’s very important that goes all the way to the top of the organisation.

"Who was responsible? Who was going to take responsibility? How are they being held accountable? These are issues they need to determine and determine quite rapidly."

Labour leader Miliband said: "When ordinary people break the law they face charges, prosecution and punishment. We need to know who knew what, when, and criminal prosecutions should follow against those who broke the law.

"This cannot be about a slap on the wrist, a fine and the foregoing of bonuses. To believe that is the end of the matter would be totally wrong."

Business secretary Cable said the government could potentially force Diamond from his position.

"There are last resort powers of director disqualification as you know, and we have many hundreds a year who are subject to that action," he told the business, innovation and skills committee.

"If the facts suggested action – and obviously we would be subject to legal advice, this is a legal process – then indeed that could well follow. That certainly is a sanction open to us, yes."

The last time the Barclays boss was in parliament he refused to waive his £8m bonus for 2010 and told MPs the time for contrition was over.

"There was a period of remorse and apology for banks and I think that period needs to be over," he said.