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Barclays to pay £290m penalties

Banking giant Barclays is now set to pay penalties of £290m to settle claims that it manipulated the interbank lending rate.

The bank was fined £59.5m - the largest imposed by City watchdog the FSA - and also agreed to payments to authorities in the US.

Chief executive Bob Diamond apologised for the incident and said that he and fellow executives Chris Lucas, Jerry del Missier and Rich Ricci have agreed not to take a bonus this year.

The London interbank offered rate (Libor) and its equivalent in Europe, Euribor, reflect the rates that banks demand to lend to one another overnight.

The FSA said that during the financial crisis, Libor submissions were reduced due to senior management concerns of negative media comment.

The regulator added that submissions on Libor and Euribor took into account requests from interest rate derivatives traders, who were motivated by profit and sought to benefit from Barclays' trading positions. The breaches involved a significant number of employees and occurred over a number of years, it added.

Mr Diamond said: "I am sorry that some people acted in a manner not consistent with our culture and values.

"The events which gave rise to the resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business.

"Nothing is more important to me than having a strong culture at Barclays."

He added that the bank took prompt action to fix the problems and co-operated extensively with authorities.

Mr Diamond took a £2.7m cash bonus last year despite widespread criticism that his pay failed to reflect the struggling performance of the bank. Overall, his package was worth £17.7m including a £5.7m tax payment made on his behalf.

Tracey McDermott, the FSA's acting director of enforcement and financial crime, said: "Barclays' misconduct was serious ... Its behaviour threatened the integrity of the rates with the risk of serious harm to other market participants."

Barclays is the first major financial institution to settle with regulators following a wide-ranging probe that has spanned both Europe and the United States.