The huge scale of the rift between the chief City regulator and Barclays
emerged as the bank's departing chairman Marcus Agius was grilled by
In a letter released today Lord Turner, chairman of the Financial Services Authority, accused Barclays of being at the "aggressive end" of rules and regulations, losing the regulator's goodwill and "seeking to spin its messages in an unhelpful way".
He told Agius months ago that he expected "you and your board to encourage a tone of full co-operation and transparency between all levels of your executive and the FSA".
Agius resigned as chairman of Barclays 10 days ago, after it was fined pounds sterling 290 million for Libor fixing, saying "the buck stops here" but his departure was followed a day later by that of chief executive Bob Diamond.
Diamond today agreed to give up pounds sterling 20 million in bonuses and receive his basic pay and pension contributions of pounds sterling 2 million as his pay-off.
Agius told MPs at the Treasury select committee that when Turner called him to see him he interpreted the FSA chairman as telling Barclays: "You do this too much. It's not helping your relationship with the regulator."
Following that meeting Turner wrote to Agius: "I wished to bring to your attention our concerns about the cumulative impression created by a pattern of behaviour over the last few years, in which Barclays often seems to be seeking to gain advantage through the use of complex structures, or through arguing for regulatory approaches which are at the aggressive end of interpretation of the relevant rules and regulations."
Turner outlined five instances where the regulator had concerns over Barclays. These included:
Its off-balance sheet vehicle Protium, which was seen "as a convoluted attempt to portray a favourable accounting result";
Valuations of risky assets "at the aggressive end of the acceptable spectrum";
A "confusing and potentially misleading impression" created by the bank of its position under European stress tests;
Shifting assets from the trading book to the balance sheet. Despite the FSA refusing permission, Barclays "continued to argue for capital optimisation in a way which inefficiently used up our resource and goodwill."
Agius denied he saw a breakdown of trust between Barclays and the FSA. He said: "Robust expressions of particular concerns...take place in the normal course and do not of themselves merit the conclusion that there has been a breakdown of trust."
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