Bob Diamond, the former boss of Barclays PLC, has given up bonuses worth up to £20 million ($31-million U.S.) following his dramatic resignation over an interest rate-fixing scandal, the bank's chairman said in parliamentary testimony on Tuesday.
Marcus Agius, the man at the top of Barclays when its traders manipulated a benchmark interest rate, appeared before a hostile panel of lawmakers as part of its investigation into a row that has caused widespread public anger in Britain.
In 2-1/2 hours of gripping testimony, Mr. Agius acknowledged the central bank governor had played a pivotal role in pushing Mr. Diamond out of his job, and described the personal drama behind the scandal which erupted last week and culminated in Mr. Diamond's resignation.
"I'm not happy to be where I am, as you can imagine," Mr. Agius told the panel in a quiet, clipped voice. "It's very difficult as you go back to say what you would have done differently."
Barclays has been fined more than $450-million for its part in manipulating the London Interbank Offered Rate, or Libor, the interest rate that underpins transactions worth hundreds of trillions of dollars worldwide. More than a dozen other banks are expected to be drawn into the scandal.
Mr. Agius was the first Barclays executive to quit when the scandal erupted but that was not enough to protect Mr. Diamond, the hard-charging American who was forced out a day later. Mr. Agius has agreed to stay on as executive chairman to find a successor to Mr. Diamond.
"Bob Diamond has voluntarily decided to forgo any deferred consideration and deferred bonuses to which he otherwise would have been entitled to," Mr. Agius, 65, told the panel. "The maximum amount would be £20-million."
Mr. Diamond, 60, would still receive a year's pay and a cash payment instead of a pension, together worth £2-million, he said.
Just before Mr. Agius appeared before the panel, Britain's financial watchdog published a scathing letter saying Barclays had frequently pushed the boundaries of regulation with an "aggressive" business approach.
When asked about the letter, Mr. Agius said: "I don't regard this as damning. I regard this as a firm letter from our regulator."
He added however he had never received a letter that harsh from a regulator and described his relationship with the Financial Services Authority as "strained".
As lawmakers piled criticism on him, Agius looked tense at times, blowing out his cheeks and shaking his head in disbelief. Mr. Agius interrupted one committee member sharply at one point to correct the pronunciation of his surname.
But some MPs appeared less hostile, thanking him for being so forthcoming.
Shedding light on what went on behind the scenes as the row escalated, Mr. Agius said Mr. Diamond resigned after the central bank governor summoned Barclays executives and made it clear that their colleague had to go.
"We explained what had happened ... he was utterly depressed as you can imagine. The conversation was not long," Mr. Agius said, who visited Mr. Diamond at his house in London.
"He asked for time to talk to his family, and we left confident that if he hadn't already made the decision, that he would make the right decision."
Mervyn King, the Bank of England governor, has declined to comment on his involvement in Mr. Diamond's resignation but he told the BBC in an interview recorded before the testimony that it was time to change the way Britain's banking system worked.
"We don't have enough banks, and those banks that we have, have become too big and they dominate the sector in a way that's rather undesirable," he said.
Mr. Diamond's potential pay-off has been the subject of much speculation in a country where anger with the culture of bankers strikes a popular chord. One of the world's richest bankers, Mr. Diamond took home £17-million last year alone.
Barclays confirmed Mr. Diamond's payoff arrangement in a statement which quoted him as saying he hoped his decision would help the bank move on.
"The wrongful actions of a relative few should not detract from the outstanding work that Barclays employees carry out each day on behalf of clients and customers around the world," he said.
"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."
Barclays is among more than a dozen global banks under investigation by authorities in North America, Europe and Japan and the only one so far to admit wrongdoing.
Suggestions that senior officials may have known about the 2008 manipulation have turned the case into a political storm, with Prime Minister David Cameron ordering the parliamentary inquiry to quell public outrage.
Mr. Cameron welcomed Mr. Diamond's decision to forgo his bonus. The European Union says it will propose new rules to criminalize the manipulation of indices such as Libor.
Barclays says a group of traders tried to manipulate Libor for profit as far back as 2005, and says it wrongly lowered estimates of the interest it paid other banks at the height of the crisis in 2008 to make its financial position appear better.
Neither Mr. Diamond nor Mr. Agius stand accused of individual wrongdoing in the rate-rigging scandal.
Libor, or the London interbank offered rate, is compiled from estimates by large international banks of how much they believe they have to pay to borrow from each other. It is used for $550-trillion (U.S.) of interest rate derivatives contracts and influences rates on mortgages, student loans and credit cards.
The rates submitted by banks are compiled by Thomson Reuters, parent company of Reuters, on behalf of the British Bankers' Association.