Former Barclays boss Bob Diamond is to make an explosive appearance before MPs after dragging senior Bank of England and government figures into the rate-rigging scandal.
A newly-released record of a phone call has sparked questions about whether the Bank's deputy governor Paul Tucker encouraged improper behaviour. Mr Tucker also allegedly told Mr Diamond "senior Whitehall figures" had suggested to him that Barclays should not be reporting such high interbank lending rates.
The dramatic disclosure came hours after Mr Diamond announced his resignation as chief executive with immediate effect, ending a stellar 16-year career with the bank. The details of his exit package are still being thrashed out - with reports that he will be asked to give up nearly £20 million in unvested shares.
The American banker is now expected to "speak more freely" when he gives evidence to the Treasury Select Committee. His daughter Nell has seemingly vented her anger on Twitter, posting a lewd jibe at Chancellor George Osborne and Labour leader Ed Miliband, who welcomed her father's departure.
Much attention at the Commons hearing will focus on a key conversation between the bank chief and Mr Tucker about Libor rates at the height of the credit crunch in 2008.
Barclays released the text of a note sent by Mr Diamond on October 30, 2008 to his right-hand man Jerry del Missier and then chief executive John Varley, recounting the exchange. Mr del Missier quit with immediate effect at the same time as Mr Diamond.
Mr Diamond said Mr Tucker had relayed concerns from "senior Whitehall figures" over why Barclays was always towards the top end of Libor pricings. He is alleged to have added that the bank's Libor rate did not "always" need to appear as high as it had recently.
According to Barclays, Mr Diamond "did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier".
"However, Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep Libors so high and he therefore passed down a direction to that effect to the submitters," a statement said.
Barclays said there was no allegation by the authorities that this instruction was intended to manipulate the ultimate Libor rate. The FSA investigated Jerry del Missier personally in relation to these events and closed the investigation without taking any enforcement action, the statement added.