Paul Tucker tells MP he did not encourage Barclays to manipulate Libor rate

He told MPs that he did “not completely” agree with the contents of a note taken of a phone conversation he had with Bob Diamond, the then-chief executive of the bank, at the height the banking crisis.

The note, which was drawn up by Mr Diamond’s assistant, was interpreted by some within the bank as giving Barclays permission to misreport its Libor rate of lending.

Mr Tucker insisted that the conversation had only been intended to check that Barclays was on a sustainable footing during the 2008 credit crisis. At the time, the bank had turned down the offer of a government line of credit.

He said: “It was not remotely in my mind during this conversation that I could be misinterpreted either by Bob Diamond or by anybody else.”

Appearing before the Treasury Select Committee, Mr Tucker also rejected claims that the phrase “senior figures within Whitehall,” who he told Mr Diamond had expressed concern over Barclays’ position, referred to ministers in then-prime minister Gordon Brown’s government.

Instead, he disclosed, he had meant senior civil servants including Sir Jeremy Heywood of the Cabinet Office.

Last week, George Osborne, the Chancellor, suggested that those around Mr Brown were “clearly involved” in the scandal. His words led to finger-pointing at Brown allies including Ed Balls, who is now the shadow chancellor, and Baroness Vadera, a City adviser.

Asked by Labour’s Pat McFadden if Mr Haywood or any government minister had sought to encourage Barclays to lower their rates, Mr Tucker said: “absolutely not”.

“I don’t think I spoke to Shriti Vadera throughout this period at all,” he added. "I certainly didn't mention ministers and I know that I didn't because I wouldn't."

The Deputy Governor said that he and government officials were not focused on Libor rates and were instead keen to ensure that Barclays would not collapse as other banks had during the extraordinary events of the credit crisis.

Denying that he told Barclays to “join the pack” by lowering their Libor rate, he told MPs: “The world is falling apart, officials in prominent places have a responsibility as best they can to ensure they know what is going on.

“The object of the call … just make sure that day to day funding operations of your bank don’t push you over the cliff.”

He added that he had not taken his own note of the conversation with Mr Diamond, saying: “Sitting here I greatly wish there were a note of it. It was impossible to do. Many of us, including me, were rushing from meeting to meeting and taking an enormous amount of calls.”

Mr Tucker also denied that Mr Diamond had sought to be a "whistle blower" by telling him that other banks were manipulating Libor.

And he admitted that Barclays' manipulation of Libor, including by individual bankers for personal gain, had been missed by the Bank of England.

But, he said, he had not been aware until recently that Barclays was a "cess pit" of rate manipulation. "What has been revealed has come as a deep shock, a deep shock," he added.

"We thought it was a malfunctioning market not a dishonest market. Maybe we were just too focused on the financial crisis."

Responding to Mr Tucker's evidence, Mr Balls said: “It is now absolutely clear that the Chancellor's allegations last week were totally false and completely without foundation. George Osborne should now publicly withdraw these false allegations and apologise.”