June 29 - Britain's banks must change their culture fundamentally after a string of scandals ranging from the ''deceitful manipulation'' of a key interest rate to ''shoddy treatment of customers'', says Bank of England Governor Mervyn King. Ciara Sutton reports.
"Deceitful manipulation" - that's what the head of the Bank of England has accused some UK banks of doing. As the threat of a criminal investigation into interest rate rigging looms over its biggest banks, Mervyn King says things must change. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MERVYN KING, SAYING: "What I hope is that everyone, everyone now understands that something went very wrong with the UK banking industry and we need to put it right. That goes to both the question of the culture in the banking industry and to the structure of the banking industry, from excessive levels of compensation, to shoddy treatment of customers, to deceitful manipulation of one of the most important interest rates, and now this morning to news of yet another mis-selling scandal. That second scandal has deepened the wound of an already catastrophic week. The UK's Financial Services Authority has settled with four banks - Barclays, RBS, HSBC and Lloyds - after they mis-sold products to protect small businesses against a rise in interest rates. Lawyers say the compensation for this could run into the hundreds of millions of pounds. But it's the Libor mis-selling scandal that looks set to draw in banks all over the world. Authorities in Europe, North America and Japan are investigating the banks which help to set the Libor, and more hefty fines are expected. U.S. and British authorities fined Barclays nearly half a billion dollars for the manipulation of London interbank offer rate. It's left CEO Bob Diamond fighting for his job. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MERVYN KING, SAYING: "What it is time to do is to do something about the banking system. We don't need an inquiry to know what we should be doing. There must be many people who work in the banking industry today who know that they are honest, hard-working and feel that they have been let down by some of their colleagues and indeed their leaders." Diamond has said he will forgo his bonus over the scandal. But Shadow Business Secretary Chuka Ummuna says this may not be enough. (SOUNDBITE) (English) CHUKA UMMUNA MP, SHADOW BUSINESS SECRETARY SAYING: "I think he needs to explain now why he is an appropriate person to oversee a process of change reform and a cultural overhaul in his bank going forward." As Diamond prepares to face the Treasury Select Committee next week - heat is mounting for other banks' malpractice to be revealed. And speculation is growing that the scandals exposed this week will require an investigation like the one into UK press ethics following the phone hacking scandal. Ciara Sutton, Reuters. ,