Media playback is unsupported on your device Media caption FSA's Andrew Bailey: "Barclays had a culture of gaming... gaming us"

A senior banking regulator has told MPs Barclays had a "culture of gaming" that emanated "from the top".

The Financial Services Authority's Andrew Bailey also said former Barclays chief executive Bob Diamond's recent evidence to MPs was "highly selective".

Earlier, ex-Barclays executive Jerry del Missier told MPs he was instructed by Mr Diamond to manipulate the bank's Libor interest rate submissions.

Barclays has been fined £290m after admitting trying to manipulate Libor.

The Treasury Committee has been hearing evidence after it was disclosed Barclays' traders tried to manipulate Libor from 2005 to 2009.

Mr Bailey told the committee there had been strong concerns about the investment bank operations at Barclays and its attitude to risk.

"There was a culture of gaming. It had to change," said Mr Bailey, adding: "We drew the conclusion that there was a problem with this institution."

He said: "You could not escape the conclusion that the culture of this institution was coming from the top." And when asked if "the top" meant Mr Diamond, Mr Bailey replied "yes".

'Highly selective'

There had been both face-to-face and written contact with Barclays to express worries among regulators.

What for many will be the most striking element of Mr del Missier's testimony was his clear recollection that Bob Diamond... had passed on an instruction from the Bank of England to lie about the interest rates Barclays was paying.

Mr Bailey said Mr Diamond's "highly selective" evidence to the committee last week did not reflect "the severity" of the "point we were making" to Barclays.

His sentiments were echoed by Lord Turner, the FSA's chairman, who told the committee there was a feeling Barclays was "not being totally honest with us about what was going on".

Last week, Mr Diamond told MPs regulators had been happy with the "tone at the top" of the bank.

Mr Diamond's evidence also appeared to differ from Mr del Missier's, who quit as Barclay's chief operating officer.

Media playback is unsupported on your device Media caption Jerry del Missier told MPs Bob Diamond instructed him to cut Libor interest rate submissions

Asked if a 2008 phone call from his former boss was an instruction to cut the Libor rate submissions, Mr del Missier said "yes it was".

Barclays has said Mr del Missier told his traders to lower Libor following a misunderstanding over an email sent from Mr Diamond.

The email had summarised a call between Mr Diamond and Paul Tucker, deputy governor of the Bank of England.

It appeared to suggest the Bank might turn a blind eye if Barclays reduced its high Libor submissions, to avoid appearing under financial stress at the height of the international banking crisis.

"Mr Tucker stated... it did not always need to be the case that we appeared as high as we have recently," the notes, written by Mr Diamond said.

Bob Diamond's notes of phone conversation with Paul Tucker Emailed to then-chief executive John Varley on 30/10/2008. Copied to Jerry del Missier. Date: 29 October 2008 Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing. His response was "you have to pay what you have to pay". I asked if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions, his response "oh, that would be worse". I explained again our market rate driven policy and that it had recently meant that we appeared in the top quartile and on occasion the top decile of the pricing. Equally I noted that we continued to see others in the market posting rates at levels that were not representative of where they would actually undertake business. This latter point has on occasion pushed us higher than would otherwise appear to be the case. In fact, we are not having to "pay up" for money at all. Mr Tucker stated the levels of calls he was receiving from Whitehall were "senior" and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently. Barclays reveals Bank call memo

Mr Diamond has said the conversation with Tucker was not an instruction to manipulate Libor, and he did not give such an instruction to Mr del Missier.

However, Mr del Missier told MPs he acted on the basis of a phone call from Mr Diamond. "It was an instruction, yes," he told the MPs.

Clear recall

"I took the action on the basis of the phone call that I had had with Mr Diamond," Mr del Missier said.

"He [Bob Diamond] said that he had a conversation with Mr Tucker of the Bank of England, that the Bank of England was getting pressure from Whitehall around Barclays, the health of Barclays as a result of Libor rates and that we should get our Libor rates down and that we should not be outliers.

"I passed the instruction on to the head of the money market desk... At the time it did not seem an inappropriate action given that this was coming from the Bank of England." Mr del Messier said.

Asked how he could have misinterpreted Mr Diamond's conversation, Mr del Missier said: "I can only tell you what I clearly recall from the conversation."

Last week Mr Tucker told the Treasury committee that the last line of Mr Diamond's note "gives the wrong impression".

"We would not suggest anybody did anything wrong," he said, adding that he had not been instructed by anyone in the government to "lean on" Barclays to lower its Libor submissions, Mr Tucker told MPs.

In a separate development MPs agreed on Monday night to set up a parliamentary commission on banking standards to investigate the Libor rigging scandal to report by December.