Growing political pressure on Barclays’ CEO in
connection with the Libor (London interbank offer rate) fixing
scandal could lead the bank’s high net worth (HNW) clients to move
their assets elsewhere, according to a top banking analyst.

“[Barclays CEO] Bob Diamond is seen as a key
person at Barclays and, if he is forced out, outflows might be seen
as Barclays’ clients would worry about management turmoil and loss
of momentum,” said Mediobanca analyst Christopher Wheeler.

So far Diamond has refused to resign and
blamed “a small number of people” for the rate-fixing scandal.

 

Barclays balance sheet a strong
point

Nevertheless, according to Wheeler, Diamond
resignation is the only scenario likely to cause Barclays to lose
assets.

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The Libor scandal itself is not capable of
diverting Barclays’ HNW clients to other wealth managers, said
Wheeler.

“Wealthy clients are resilient; they want good
advice, as well as strong balance sheets and hence security and
stability. Barclays still have a strong balance sheet, as do most
of the large wealth managers involved in the investigation,” he
said.

 

‘A level playing field of
shame’

Barclays’ ability to hang on to its HNW
clients after the scandal could also be helped by the growing
systemic dimension of the scandal. 

“A lot of Barclays’ wealth management
competitors look set to settle with the regulators creating ‘a
level playing field of shame’,” said Wheeler.

“If politicians do force Diamond out, it does
not bode well for some of the highest profile bank CEOs whose banks
are also being investigated,” said the analyst.

Nearly 20 banks are under investigation for
similar offences by authorities in Europe, North America and
Japan.

The Times revealed that RBS is likely to be
fined about £150m ($235m) for market manipulation.

To date Barclays has been the only bank to be
officially fined. Regulators in the US and UK slapped a £291m fine
on the UK bank for manipulating the Libor to improve markets’
perception of its financial health.

In a letter to the Chairman of the Treasury
Committee, Andrew Tyrie MP, Diamond apologised for the wrongdoings
and said Barclays is currently undergoing a review of employees’
conduct.

“We need to work every day to rebuild the
trust that has been damaged by these actions and others that have
come before them,” Diamond said.

PBI contacted Barclays’ wealth division for a
response to Wheeler’s comments, but the bank had not
responded by the time this story was posted.