- A parliamentary report was issued on Saturday
- The committee cites a "deeply flawed culture"
- The management "turned a blind eye to the culture of the trading floor"
- Diamond took issue with attack on culture but called traders' acts "reprehensible"
A British parliamentary report slammed Barclays bank on Saturday for its "disgraceful" actions that led to a rate-rigging scandal.
The Treasury Select Committee issued a report after recent hearings over the scandal. Barclays was fined $450 million by British and American regulators after some of its traders purposely manipulated its interest rates as part of Libor, or London Interbank Offered Rate. The scandal also led to the resignation of Bob Diamond, its chief executive.
The report said the source of the scandal was a "deeply flawed culture" by Barclays and not just actions "small group of rogue traders."
"There was something deeply wrong with the culture of Barclays. Such behavior would only be possible if the management of the bank turned a blind eye to the culture of the trading floor," the report said.
The report regarded Barclays" "incentives and control systems" as "so defective" that they served to reward traders themselves, not matter what "the impact of shareholders and the bank's overall performance" would be.
"Now exposed, their actions are to the detriment of Barclays' reputation and the reputation of the industry. The standards and culture of Barclays, and banking more widely, are in a poor state. Urgent reform, by both regulators and banks, is needed to prevent such misconduct flourishing."
The issue is important because the scandal centered on the rates at which banks lend each other money.
The Libor is hammered out based on input from big banks in London each morning and used to calculate trillions of dollars in consumer and business loans around the world. It affects how much interest ordinary people pay on everything from credit card debt to home mortgages and student loans.
The fines against Barclays came after it admitted some of its trading desks purposely manipulated the rate for personal benefit during the height of the global financial crisis.
Between 2005 and 2009, when Diamond was in charge of the investment branch of Barclays bank, traders were influencing the pricing of rates which impacts up to $800 trillion of securities. E-mails revealed as part of the rate fixing investigation showed traders were seeking beneficial rates for their trading positions.
Diamond, in a statement Saturday, labeled the "behavior of a small group of traders related to Libor manipulation" as "reprehensible and not in keeping with Barclays' high standards."
But he took "particular issue with the attacks on Barclays' culture and character" and disputes the negative image of the bank. He said the bank "is a tremendous institution with an over 300-year tradition of supporting economic growth and the communities in which we live and work."
"It should be recorded that broader issues with Libor have been a subject of discussion among regulators for years, and there is little dispute that Barclays was both aggressive in its investigation of this matter and engaged in its cooperation with the appropriate authorities," he said.
Politicians from both sides of the fence have slammed Barclays, with Prime Minister David Cameron saying the manipulation was "outrageous."
Further high-profile resignations in the banking sector are possible given the precedent set by Barclays. The bank said it had alerted U.S. and British authorities about suspicious Libor submissions by other banks in late 2008, and was "disappointed that no effective action was taken."