Bank of England's Tucker 'wasn't encouraged to lean on Barclays'
The Bank of England's deputy governor, Paul Tucker, strongly denied suggestions yesterday that government ministers had pressured him to encourage banks to manipulate interest rates in a scandal gripping Britain's financial sector.
A row over how much top officials knew about interest-rate rigging intensified as Mr Tucker appeared before a parliamentary committee as part of its investigation into Barclays and other banks suspected of manipulating a key interbank lending rate.
"Absolutely not," Mr Tucker, tipped to be the next Bank of England governor, said when asked by lawmakers if any government officials or ministers had encouraged him to "lean on Barclays" or any other bank to lower their Libor submissions.
The scandal -- complete with emails showing bankers boasting of manipulating interest rates and congratulating each other with offers of champagne -- has triggered fierce criticism about the financial industry in general and Barclays in particular.
Barclays has been fined more that £289.9m (€365m) for its part in manipulating the London Interbank Offered Rate, or Libor, the interest rate that is the global benchmark for transactions worth billions of dollars.
Barclays chief executive Bob Diamond was forced to resign last week, paying the price of a scandal that is expected to drag in other international banks.
The suggestion that members of the British government were involved in attempts to massage down banks' borrowing costs at the height of the financial crisis four years ago has added a political dimension to the affair.
Speculation about the possible involvement of politicians and top officials has been rife since last week when Barclays released notes suggesting authorities might have prompted it to lower estimates of the rate it pays other banks to borrow at the height of the financial crisis in 2008.
That email drew Mr Tucker into the scandal, showing that in October 2008, Mr Tucker told Mr Diamond, then Barclays investment bank boss, that officials questioned why Barclays' rates were so high.
Barclays had said Mr Diamond's deputy, Jerry del Missier, had understood Mr Tucker's comments as a green light to manipulate rates downwards, although Mr Diamond himself has said he believed Mr Tucker was merely passing on the view of officials and did nothing improper.
"It was not remotely in my mind during this conversation that I could be misinterpreted by Bob Diamond or anybody else," Mr Tucker told the inquiry.
Mr Diamond has said that he did not interpret Mr Tucker's comments as an encouragement to understate borrowing costs, while Mr Del Missier has not commented.
Prime Minister David Cameron announced a parliamentary inquiry into banks after the scandal erupted. (Reuters)