Barclays chairman quits over loan rates scandal By SCOTT MACNAB Published on Sunday 1 July 2012 23:58 THE chairman of Barclays is expected to become the first victim of the scandal over the rigging of inter-bank lending rates after it emerged last night that he is set to resign. Marcus Agius is due to confirm his departure this morning after Barclays was fined £290 million for attempting to manipulate the Libor market. As the scandal continues to plague the banking world, Royal Bank of Scotland (RBS) confirmed yesterday that it sacked four members of staff over their alleged involvement in the controversy, and the head of the Financial Services Authority (FSA) said the law must be tightened to deal with abuses. BT chairman Sir Mike Rake is being touted as the favourite to replace Mr Agius, who is not expected to leave his post immediately. His departure could help ease pressure on embattled chief executive Bob Diamond, who was head of Barclays" investment banking arm at the time of the Libor abuses. Chancellor George Osborne has confirmed that HSBC, RBS, Citigroup and UBS are also under investigation over the inter-bank rate rigging. Speaking yesterday, Lord Turner, head of the FSA, the City watchdog, admitted powers on the matter had not gone far enough. He said: "I think if you go back over 20 years we started with a very light touch self-regulatory approach. Slowly, over the past 15 years or so, we have toughened our approach. Further steps were made a few years ago to give us the ability to bring criminal charges in particular areas of market abuse, but they did not cover the Libor market. I think we now have to look further and see whether we should strengthen these powers considerably on top of what we've got at the moment. It has been a gradual strengthening over time, but I don't think it has gone far enough. The BBC said last night Mr Agius" resignation statement would say there had been an "unacceptable standard of behaviour" at Barclays and that the rate-rigging scandal was a "devastating blow to the bank's reputation" and that he would apologise to its staff, customers and shareholders. It is understood he would say he believed the buck stopped with him, although most calls have been for Mr Diamond to carry the can. Misreporting of the Libor (London Inter-Bank Offered Rate) can boost profits by giving a wrongful impression that a bank is a safe bet to invest in. The FSA found Barclays traders had lied about the interest rate other banks were charging it for loans. Experts claimed yesterday that up to 20 institutions could be involved. David Buik, a market analyst with BGC Partners, said: "When this investigation is complete, I think you'll find at least another 20 banks were in there." The RBS dismissals, which came to light yesterday, happened towards the end of last year. A spokesman for RBS said it could not comment on the sackings due to ongoing legal action. Banking insiders have indicated that the removal of those involved underlines that the new management team at the bank is determined to deal with such issues. But the revelations are likely to fuel public anger because RBS was bailed out to the tune of billions of pounds by taxpayers just four years ago and still remains 84 per cent owned by the government. The UK government is facing repeated calls for a toughening of banking regulations, despite Prime Minister David Cameron claiming to support a full investigation into the Libor scandal. An independent review into the allegation is to be set up next week, and Mr Cameron said the government would ensure "the criminal law can go wherever it needs to." Business Secretary Vince Cable said yesterday that there was an "awful lot of cleaning up" to be done. "[The public] just can't understand why people are thrown into jail for petty theft and these guys just walk away having perpetrated what looks like conspiracy," he added. Treasury sources said its review, to be headed by an as-yet undisclosed independent figure, would ensure a speedy response to the issue, resulting in amendments to the Financial Services Bill this summer. Ministers are considering setting up a separate review into the professional standards of bankers. Labour leader Ed Miliband insisted the public would not accept anything less than a full-scale independent inquiry into banking culture and practices. On Friday, the FSA revealed separately that Barclays, HSBC, RBS and Lloyds Banking Group had agreed to pay compensation to customers who were mis-sold interest-rate hedging products. Some 28,000 of the products have been sold since 2001 and may have been offered as protection - or to act as a hedge - against a rise in interest rates without the customer fully grasping the downside risks. Serious Fraud Office investigators are in talks with the regulator over the scandal. Mr Miliband said the Prime Minister was "out of touch" and warned that voters would not accept "the establishment closing ranks." He called for an inquiry along the lines of Lord Justice Leveson's into media ethics and practices. "I have news for David Cameron: the people of this country want a moment of reckoning for our banks," he told a Fabian Society conference in London. "The British people will not tolerate the establishment closing ranks saying: "We don't need an inquiry." They want a light shone into every dark corner of our banking system. They want bankers held to account. They want the system rebuilt. Research by the consumer watchdog Which? at the weekend also showed that four out of five people want individuals to be prosecuted when banks break the law. It also showed that two-thirds of people believe the government will not act in their best interests when implementing banking reform. Only one in five thinks the FSA is effective in regulating UK banks. Which? is calling on the government to ensure criminal prosecutions can be brought against individuals - up to boardroom level - who have presided over corrupt practices. It also wants the process of separating retail banking from investment banking to be fast-tracked. Banks and bankers will continue to be seen as untouchable unless individuals are held to account and the culture of banking is changed for good. The fines are not a deterrent. Last week Barclays was fined less than £60m in the UK, compared with £231m in the United States, and has paid out £2 billion in compensation and settlements in the last three years, but that seems to have little effect.