BoE chief denies 'influencing bank'

Banbury Cake: Deputy Governor of the Bank of England Paul Tucker is appearing before an MPs committee Deputy Governor of the Bank of England Paul Tucker is appearing before an MPs committee

Bank of England deputy governor Paul Tucker has told MPs that he "absolutely" refuted claims he attempted to influence Barclays into manipulating the Libor rate.

Speaking before the Treasury Select Committee, Mr Tucker said that a record of a contentious phonecall he had with former Barclays boss Bob Diamond about lending rates gave the "wrong impression".

The deputy governor found himself in the spotlight after Mr Diamond released the note, in which it has been suggested Mr Tucker was encouraging the bank to submit lower Libor submissions in light of concerns from senior Whitehall figures.

Mr Tucker confirmed one of the Whitehall figures was the then Downing Street chief of staff Sir Jeremy Heywood but denied he had attempted to influence Barclays into rigging rates.

Barclays has been the focal point for a row over banking culture after the bank was fined £290 million by UK and US regulators for manipulating the Libor, which affects mortgages and loans.

Mr Tucker said that the senior Whitehall figures whom he spoke to about Libor included Sir Jeremy, his predecessor as Number 10 chief of staff Tom Scholar, then Downing Street adviser Sir Jon Cunliffe and Treasury permanent secretary Sir Nicholas Macpherson.

But he denied "absolutely" that any Whitehall officials or Government ministers - including Ed Balls and Baroness Vadera - ever encouraged him to "lean on" Barclays or any other bank to lower its Libor submissions.

Mr Tucker said that concerns about Barclays' submissions existed at the time he spoke to Mr Diamond in October 2008 not only in Whitehall but also in the markets.

After the launch of a package of co-ordinated international efforts to shore up the markets early in the month, both officials and markets were monitoring Libor and found that - compared to many other participants which had lowered their submissions - "Barclays continued to pay higher rates in the market, as reflected in their Libor submissions".

Attention was focused on the issue of whether Barclays had taken the right decision in declining the state support which was accepted by rivals RBS and Lloyds.

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