The Bank of England told us to do it, claims Barclays

Baroness Vadera. Business Minister Shriti

July 3, 2012, The Telegraph (One of the UK's leading newspapers)

The Deputy Governor of the Bank of England encouraged Barclays to try to lower interest rates after coming under pressure from senior members of the last Labour government, documents have disclosed. 

A memo published by Barclays suggested that Paul Tucker gave a hint to Bob Diamond, the bank’s chief executive, in 2008 that the rate it was claiming to be paying to borrow money from other banks could be lowered. 

His suggestion followed questions from “senior figures within Whitehall” about why Barclays was having to pay so much interest on its borrowings, the memo states. Barclays and other banks have been accused of artificially manipulating the Libor rate, which is used to set the borrowing costs for millions of consumers, businesses and investors, by falsely stating how much they were paying to borrow money. 

The bank claimed yesterday that one of its most senior executives cut the Libor rate only at the height of the credit crisis after intervention from the Bank of England. 

The memo, written on Oct 29, 2008, by Mr Diamond and circulated to two other senior bank officials, said: “Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing.” Government sources suggested that Baroness Vadera, one of Gordon Brown’s closest colleagues, was responsible for the contact with the Bank of England. 

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