Top Barclays Banker Quits in Growing Scandal

Jul 3, 2012 8:06am

Morning Business Memo

One of the world’s most powerful banking executives has announced his immediate resignation. American executive Bob Diamond, 60, has quit as Barclays’ CEO–the latest casualty of a financial markets scandal. Diamond caved in to growing pressure in Britain after the bank paid $453 million in fines.  A joint US-UK investigation found that Barclays’ traders had attempted to fix a key global interest rate benchmark. Other global banking firms are still under investigation by regulators on several continents. “I think and I hope that it is the first step towards a new culture of responsibility in British banking,” said Britain’s top finance minister George Osborne, reacting to the Diamond announcement. “I think it is the right decision for the country.”

The scandal involves the LIBOR rate. Barclays is one of a number of banks which regularly submit estimates of what it will cost them to borrow from other banks. These feed into a calculation of the London interbank offered rate (LIBOR) which is used to calculate payments from a range of financial contracts. The London rate, and the related European interbank offered rate, are the benchmarks for over $500 trillion in global contracts, including loans and mortgages.

Diamond has pulled out of hosting a London fundraiser for Mitt Romney, reports the Financial Times. Diamond “had been one of 18 co-hosts for a dinner in London later this month where guests are being asked to pay $25,000-$75,000 to raise money for Mr. Romney,” says the FT.

Sony wants to put its video games on a cloud. Sony is buying the video game-streaming company Gaikai for about $380 million in a bid to establish a new cloud-based gaming service. Video game streaming is not as widespread as online music and movies. The technology is far more complicated, because unlike movies, games cannot be compressed into smaller files. And since they are interactive, video games require an immediate reaction to a player’s actions so that on-screen characters can respond as expected. Gaikai’s technology lets people play video games on Internet-connected devices, including mobile gadgets, computers and TV sets.

Facebook stock is down again to $30.77 – falling yesterday for the fourth straight day. Facebook fell 18 percent from its May offering price of $38.

Boeing is predicting that the world’s airlines will buy 34,000 new airplanes over the next 20 years, driven by strong growth in China, India and other emerging market. Boeing predicted that $4.5 trillion worth of planes will be sold. It will have to compete with Airbus and other competitors including Bombardier, Embraer, and China’s state-owned COMAC.

This may be a temporary reprieve but the number of unemployed people in Spain appears to have dropped sharply in recent weeks. Claims for jobless benefits fell by 99,000 in June as Spanish employers hired workers for the busy summer tourism season. Spain’s unemployment rate recently stood at 24.4 percent, the highest rate among the 17 nations that use the euro.

Have a great 4th… Morning Business Memo will return on Thursday.

Richard Davies Business Correspondent ABC NEWS Radio ABCNews.com

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