The former boss of Barclays says other banks in October 2008 were reporting lower borrowing rates, which risked ruining his bank’s efforts to attract investment from Qatar and elsewhere.
Banks borrow from each other, so a high interest rate can indicate a bank is having financial trouble and needs to pay more to borrow money.
Bob Diamond told a parliamentary committee there was fear that the government would be alarmed by Barclays’ borrowing rates and would conclude that the bank was in trouble. He insisted Barclays had been reporting accurate rates in October.
Barclays was able to raise additional capital, and got through the credit crisis without a government bailout.
Diamond resigned as chief executive officer a day earlier in response to a scandal of false interest rate reporting which also prompted the resignation of the firm’s chairman and chief operating officer, and has cost Barclays $453 million in US and British fines.