FSA warned Barclays over Diamond The City watchdog decided in 2010 that its ongoing probe of allegations that Barclays had attempted to manipulate key interbank lending rates had "no bearing" on Bob Diamond's suitability to become chief executive of the bank. But the Financial Services Authority privately warned Marcus Agius, then Barclays chairman, that its "position could change" as new facts emerged in the Libor investigation, according to internal FSA records released on Wednesday. Mr Diamond was forced out of the bank earlier this year after Barclays agreed to pay a record £290m fine to the FSA and US regulators to settle the investigation that claimed the lender had sought to manipulate the London Interbank Offered Rate and similar rates set in Brussels. However, Mr Diamond's departure was not part of the regulatory settlement and only came about after vociferous criticism of Barclays by top politicians, including David Cameron and George Osborne. At that point FSA officials and Sir Mervyn King, Bank of England governor, privately told the bank's chief executive he had to go. People familiar with the investigations said the investigators did not believe the evidence - including Mr Diamond's 2009 conversation with another BofE official about Barclays" submissions to the Libor rate setting process - was enough to render him unfit to lead the bank. Rather, they felt the outcry about the settlement had deeply undermined public confidence in the bank and Mr Diamond was no longer in a position to restore trust. The FSA declined to comment on the records, which also show that Hector Sants, then the regulator's chief executive, told Mr Agius in September 2010 about "the FSA's historical concerns regarding Barclays risk appetite and control" and that the investment banking division, then led by Mr Diamond, was where the concerns "were foremost." Mr Agius sought to reassure the watchdog, saying that Mr Diamond was "very competitive" and that he expected the American to "mature and relax" given that he had by then achieved his goal of becoming chief executive. Barclays declined to comment. The watchdog's contemporaneous records of the meeting were released by parliament as part of correspondence between Mr Sants and Andrew Tyrie, chairman of the Treasury Select Committee. In a letter to the Treasury Select Committee earlier this year, Mr Sants, who was FSA chief executive in 2010, took issue with the committee for saying in its Libor report that the watchdog had not considered the investigation when approving Mr Diamond's appointment.