Barclays boss Bob Diamond says he will not resign

Bob Diamond says the bank's senior managers acted as soon as they were aware of the practice

The boss of Barclays has insisted he will not resign after staff rigged the key lending rate between banks.

Bob Diamond was speaking at a meeting of analysts at US bank, Morgan Stanley.

And in a letter agreeing to give evidence to MPs, Mr Diamond condemned the inappropriate behaviour of a "small number" of employees who had tried to make profits for their own benefit.

On Thursday, the prime minister said the bank's management faced "serious questions" after it was fined £290m.

Some MPs - including Tories Steve Baker and Nick De Bois - have suggested Mr Diamond should resign and former Liberal Democrat leader Paddy Ashdown told BBC One's Question Time his position was now "untenable".

A pensions lobby group, <link> <caption>the Local Authority Pension Fund Forum said all bonuses should be recalled for the period</caption> <url href="http://static.lapfforum.org/LAPFF_response_LIBOR_fines_Barclays.pdf" platform="highweb"/> </link> over which the rigging took place.

It also urged the company to pursue criminal charges against staff and executives at the bank.

Barclays and other banks are facing the threat of criminal investigation in the UK over the scandal.

Royal Bank of Scotland has said that it expects to reach a settlement in a few months. One report said the bank faced a fine of £150m for market manipulation but RBS said it did not recognise that figure.

'Control systems'

<link> <caption>In his open letter to Andrew Tyrie MP</caption> <url href="http://group.barclays.com/news/news-article/1329925904937/navigation-1330349038798" platform="highweb"/> </link> , the chairman of the Commons Treasury Committee, Mr Diamond pointed out that authorities found no evidence that knowledge of the manipulation, for which it has been fined £290m, went any higher than "immediate desk supervisors".

But he admitted that the bank's control systems should have been much stronger.

He added: "When the trader conduct was first discovered by more senior management, steps were immediately taken to stop it, and it was reported to the authorities."

Mr Diamond's comments come after Prime Minister David Cameron said: "The whole management team [at Barclays] have got some serious questions to answer. Let them answer those questions first.

"Who was responsible? Who was going to take responsibility? How are they being held accountable?"

Labour leader Ed Miliband said those Barclays staff found to have committed the wrongdoing "should face the full force of the law".

Mr Diamond also said that Barclays was now "completing a review of employee conduct for all those involved", and that "all appropriate options will be pursued for those who have a case to answer, ranging from the clawback or withholding of remuneration to being asked to leave the bank".

'Substandard'

Barclays was fined £290m ($450m) on Wednesday by the UK and US authorities after an investigation into claims that several banks manipulated the Libor rate at which they lend to each other.

Investigators say that Barclays' traders lied to make the bank look more secure during the financial crisis and, sometimes - working with traders at other banks - to make a profit.

Barclays had acknowledged that its actions between 2005 and 2009 had fallen "well short of standards".

The scandal has hit Barclays shares, which ended Thursday trading down 15.5%.

Other banks shares also fell, with RBS losing 11.5%, Lloyds down 3.9%, and HSBC giving up 2.6%.

Meanwhile, Chancellor George Osborne confirmed that HSBC, RBS, Citigroup and UBS were also under investigation.

The Serious Fraud Office subsequently said it was in talks with the Financial Services Authority (FSA) about the case. This could result in UK criminal proceedings being brought.

The US Department of Justice had already confirmed that criminal investigations into "other financial institutions and individuals" were ongoing.

Mortgage deals

Barclays' misconduct relates to the daily setting of the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).

These are two of the most important interest rates in the global financial markets and directly influence the value of trillions of dollars of financial deals between banks and other institutions.

They can also affect lending rates to the public, for instance with some mortgage deals.

The British Bankers' Association asked the government on Thursday to consider taking over the regulation of how Libor is set.

'Accepted culture'

The fine imposed on Barclays is part of an international investigation into the setting of interbank rates between 2005 and 2009.

Between 2005 and 2008, the Barclays staff who submitted estimates of their own interbank lending rates were frequently lobbied by its derivatives traders to put in figures which would benefit their trading positions, in order to produce a profit for the bank.

And between 2007 and 2009, during the height of the banking crisis, the staff put in artificially low figures, to avoid the suspicion that Barclays was under financial stress and thus having to borrow at noticeably higher rates than its competitors.

The FSA said Barclays traders were quite open about their routine attempts to manipulate rates.

"Requests to Barclays' submitters were made verbally and a large amount of email and instant message evidence consisting of derivatives traders' requests also exists," the FSA said.