Former Barclays chief executive Bob Diamond will give up bonuses worth £20 million after resigning over a rate-rigging scandal, the bank’s chairman said Tuesday.
But chairman Marcus Agius told a British lawmakers investigating the scandal that Diamond, whose pay packages during the financial crisis were fiercely controversial, would still receive a final pay-off of around £2 million ($3 million, 2.5 million euros).
“Bob Diamond has voluntarily decided to forego any deferred consideration and any deferred bonuses to which he would otherwise have been entitled,” Agius told parliament’s Treasury Select Committee.
“The maximum amount would be £20 million,” he said.
Diamond and Agius both resigned last week over revelations that Barclays traders attempted to manipulate key inter-bank lending rates, but Agius is staying on to lead the search for Diamond’s replacement.
Barclays was fined £290 million last month by British and US regulators for the attempted rigging of the Libor inter-bank lending rate and Euribor, its eurozone equivalent.
When asked about what US-born Diamond, who only took over at Barclays chief executive in January 2011, would receive in terms of salary, pension and other benefits, Agius told the said “it comes to around £2 million.”
In a separate statement, Barclays said Diamond, 60, would still receive up to 12 months’ salary, pension allowance and other benefits.
Diamond had “voluntarily offered to waive all of his unvested deferred bonus awards and long term incentive share awards,” it said.
“This is in addition to his previous decision to forego any consideration for an annual bonus this year.”
The bank added that Diamond has also agreed to give up his contractual entitlement to tax equalisation.
“Despite having no personal culpability, he recognises more than anyone the negative attention that they have generated and has taken characteristically strong action to address that,” Agius said of Diamond in the statement.
Diamond himself wrote: “It is my hope that my decision to step down and today’s agreement on my remuneration will help close this chapter and allow Barclays to move forward and prosper.”
Diamond was one of the world’s highest paid bankers, earning a package worth £17.7 million last year, and drew the admiration of many in the industry for making Barclays a global player in investment banking.
But his payouts became a symbol of banking’s bonus culture, which became deeply unpopular with the British public during the economic downturn.
Agius told lawmakers that Barclays was working to reduce its levels of executive pay — a hot political issue in Britain — but said it was “simplistic” to suggest that pay could come down faster.
“If we reduce the payment of our staff too fast, they leave,” he told the committee.
Diamond later said he was “dismayed” during Agius’s hearing when lawmakers suggested he had been “less than candid” during his own appearance before the committee last week
In a letter to committee chairman Andrew Tyrie, Diamond called the accusation “unfair and unfounded”.
The rate-rigging scandal has claimed the job of Barclays’ chief operating officer Jerry del Missier as well as those of Diamond and Agius, and threatens to engulf other banks.
Britain’s Serious Fraud Office on Friday launched an investigation into the scandal after announcing that it was considering criminal prosecutions.
Libor is a flagship financial instrument used all over the world to calculate what banks, businesses and individuals pay to borrow money, while Euribor is the eurozone equivalent.
Barclays has admitted that its traders routinely submitted false Libor and Euribor readings as they attempted to benefit their own lucrative derivatives deals.
The lender also posted lower Libor values from 2008 to prevent speculation that it would require a government bailout such as rival groups Lloyds and the Royal Bank of Scotland.
Before the committee on Monday, Bank of England Deputy Governor Paul Tucker “absolutely” denied that he had encouraged Barclays traders to manipulate key inter-bank lending rates.