01/07/2012 12:03 BST | Updated 31/08/2012 06:12 BST

Bob Diamond At Treasury Select Committee: Questions Facing Barclays Boss

Barclays boss Bob Diamond's appearance before the Treasury Select Committee on Wednesday promises to be a more humbling affair than his last, when he controversially told MPs the "time for remorse is over".

Mr Diamond will no doubt have some tough questions to answer, having presided over the division responsible for what is fast turning into one of the biggest banking scandals of our time.

He will need to defend his position at the helm of the banking giant amid mounting pressure to resign since the rate-rigging scandal was revealed on Wednesday.

So far Mr Diamond has insisted the rigging offences were carried out by "a small number of people relative to the size of Barclays trading operations".

In a letter penned to the committee ahead of the hearing, he has maintained the authorities found no evidence that anyone more senior than the immediate desk supervisors was aware of the requests by traders, at the time that they were made.

Diamond has apologised for the scandal

Mr Diamond, who was in charge of Barclays Capital when the breaches occurred, has apologised and said nothing was more important to him than "having a strong culture at Barclays".

But in an echo of the Leveson inquiry into phone hacking at The News of the World, Mr Diamond will find it difficult to explain how such offences could be committed without senior management being aware.

Importantly, the committee and its chairman Andrew Tyrie will be keen to find out how the corporate governance system within Barclays failed to pick this up.

A trail of emails, instant messages and phone transcripts disclosed by the Financial Services Authority (FSA) showed how traders requested Barclays make changes to the Libor rate to boost their profits.

With news confirmed that Royal Bank of Scotland - another of the banks under investigation for Libor fixing - has sacked 10 of its traders, Mr Diamond is expected to be quizzed on what action the bank is taking internally and what systems will be put in place to avoid a repeat of the scandal.

Mr Tyrie has already said he wants to know who made money from the scandal and how entrenched this type of behaviour was within the bank, as well as getting an exact picture on which management knew about the rate rigging and how high up they were in the chain of management.

As the Murdoch family has discovered at News Corporation after the phone hacking inquiry, it may not be enough for Mr Diamond and his fellow bank bosses to claim they were unaware of the scandal.

Bonus clawbacks will be another contentious issue, with demands for the bank to recoup cash bonuses paid out to all those involved during the years the rate fixing took place.

Mr Diamond and three senior executives - Jerry del Missier, Rich Ricci and chief financial officer Chris Lucas - have waived their 2012 bonuses, but this has not eased public anger.

Bonuses paid out to traders and to the management between 2005 and 2009, when the rigging took place, could also be subject to clawback.

Mr Diamond may be asked to account for the timing of the scandal and give a detailed breakdown of how and when it first began as well as the scale of rate fixing within the industry.

With more revelations expected over the coming weeks regarding other banks being investigated, Mr Diamond is set to be pressed on whether it was an act of collusion between banks.

His view on the implications for the wider financial system will also be intriguing.

The size of the fine imposed on Barclays - including a record penalty from the FSA - reflected the seriousness of the misconduct, given the importance of interbank lending rates in global financial markets.

Banks use Libor as a basis of swap rates - the borrowing rate between financial institutions. These swap rates are in turn used to determine pricing for a vast range of products around the world, including corporate loans and fixed-deal mortgages.

Pension funds are also thought to have been adversely affected by Libor manipulation and the true extent of the impact of the rate rigging may not be known for some time.

Mr Tyrie said on making his request for a hearing with Mr Diamond that the public had a right to know what happened within Barclays.

He said: "This is the most damaging scam I can recall. The reputation of Britain's financial services industry has been severely tarnished, albeit unfairly for the overwhelming majority unconnected with the scam.

"Parliament and the public need to know what went wrong and whether the perpetrators have been rooted out. We also need to be given confidence that this has been put right."