Pressure is growing on Bob Diamond not to take a severance package worth a reported £17m, with Ed Balls saying the payout would be “outrageous” and business secretary Vince Cable saying he hoped the Barclays’ board would “take a fairly strict view about” the golden parachute pay deal.
Speaking to the BBC’s Andrew Marr programme on Sunday morning, shadow chancellor Ed Balls said the public would be outraged by Diamond’s payout.
"I think people will look at that and think that is totally outrageous. It’s outrageous that somebody should stand aside [Diamond resigned with immediate effect last week] because the board decides that there’s a problem and then get a payout which is, sort of, off the scale for anything anybody, normal people, will earn in their lifetimes.
“I think the shareholders are going to think really had about this and I think the government will need to look at this as well and talk to the shareholders. They clearly talked to the shareholders about Mr Diamond. I think they’re going to have to say to them the public will just think that’ is really shocking.”
The bank's board is understood to have discussions with the Association of British Insurers, the trade group which represents billion of pounds of pension funds' investments, over plans to open negotiations with Diamond over his exit pay.
Marcus Agius, who also announced his intention to step down but will remain until Diamond's successor is found, will give evidence to MPs on Tuesday but is likely to tell them nothing has been decided.
Business Secretary Vince Cable also hinted Diamond should not get such a large exit package, telling the Andrew Marr show: "I think in view of what's happened, I would sincerely hope that the board of Barclays take a fairly strict view about this."
But Cable added: "There isn't anything that the Government can do about it but I think in view of the shame that has been heaped on Barclays bank, I would be very, very surprised if the chairman and the board were to allow another outrage to occur."
The comments came as the row over ethics in the banking sector raged on with Labour leader Ed Miliband unveiling a radical vision for the industry in the wake of the Libor-fixing scandal.
Meanwhile, Barclays, which was fined £290 million by UK and US regulators for manipulating the key interbank lending rate, is reportedly considering spinning off its controversial investment banking arm Barclays Capital.
The developments came after the Serious Fraud Office on Friday launched a criminal investigation into alleged Libor-rigging at Barclays and the wider industry.
Speaking to the Mail on Sunday, Miliband said he would like to see Britain's top five high street banks broken up and forced to sell up to 1,000 branches to pave the way for two new privately run challenger banks to bolster competition in the sector.
"We need a revolution in British banking," he said.
Lloyds Banking Group is already selling off more than 600 branches, with Co-operative Bank currently in exclusive talks to form what would amount to one of the challenger banks included in Miliband's overhaul.
The Opposition leader also wants a new code of conduct for the banks to follow, which would be supervised by an organisation similar to the British Medical Association.
In addition, Miliband would like to see a specialist banking unit set up with the Serious Fraud Office to tackle the "weak and fragmented" approach to fraud investigations.
Balls told the BBC that the banking sector needed a "root and branch review" and said the Government was "dragging their feet".
Balls called for recommendations put forward by Sir John Vickers and the Independent Commission on Banking (ICB) to go "further and faster".
"It's also about the culture of banks," Balls added. "There's no proper code of conduct. It's not enforced. Bankers can do what they get away with."
Meanwhile, the Sunday Times claimed Barclays board is looking at whether to spin off Barclays Capital from the group's retail banking operations in a bid to tackle the crisis at the banking group.
The investment bank would be floated on the New York Stock Exchange with the rest of the group retaining its London listing.
More than £3.7 billion has been wiped off Barclays' market value since the Libor revelations.
Bank of England deputy governor Paul Tucker will clarify his role in the affair when he gives evidence to the Treasury Select Committee on Monday.
Tucker was dragged into the scandal by Mr Diamond, who revealed a record of a conversation they had in October 2008 in which the deputy governor relayed concerns in Whitehall about Barclays' high Libor rates.
The American banker said Mr Tucker was trying to warn him that "there are ministers in Whitehall who are hearing that Barclays is always high, that could lead to the impression that you are not funding yourself".