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Diamond defends rates approach
Former Barclays boss Bob Diamond has said the bank lowered key lending rates amid fears the government would want to nationalise the lender during the financial crisis.
Mr Diamond, who resigned as chief executive, was giving evidence to the Treasury Select Committee on the culture he presided over at the bank as staff fiddled the key Libor rate that affects the price of mortgages and loans.
Mr Diamond said Bank of England deputy governor Paul Tucker relayed concerns from officials within government that Barclays' Libor rate was too high - which could be a sign of financial weakness at the bank.
He said: "Whitehall was told Barclays had the highest Libor. They would think we couldn't fund and must nationalise the bank."
Mr Diamond said the conversation with Mr Tucker came shortly before the bank secured funding with Abu Dhabi on October 31, implying it may not have completed had concerns over Barclays' financial health spread.
Mr Diamond said there were 14 or 15 other banks, including nationalised lenders, who he knew had a weaker financial position than Barclays and were still submitting lower Libor rates.
Questioned over the phone call with Mr Tucker, Mr Diamond said the phrase "Whitehall figures" referred to "officials in government".
Outlining his interpretation of Mr Tucker's comments, he said: "He felt that our Libor rates, relevant to the other 15 posters, could be lower."
But he insisted he did not feel any action had been requested. "I didn't feel it was an instruction," he said.
Mr Diamond opened the session by declaring his "love" for Barclays and added: "At the core of the issues there clearly were mistakes, clearly there was behaviour that was reprehensible."