The revelation in a letter to the Treasury Select Committee will put increasing pressure on Mr Diamond to reveal whether the decision was taken at board level, reports The Telegraph.
“Even taking account of the abnormal market conditions at the height of the financial crisis, and that the motivation was to protect the bank, not to influence the ultimate rate, I accept that the decision to lower submissions was wrong,” he stated.
In the most detailed account so far on how the Libor rates were manipulated, Mr Diamond said fixing of Libor rates was carried out by individual trades and, separately, by the bank itself.
He said traders attempted to influence the rate in order to benefit their own desks’ trading positions. The bank made the decision in order to protect shareholders’ interests, he said.
The Libor scandal saw £3.2bn wiped off the bank’s value on Thursday in the biggest one day fall in its share price for more than three years
The bank’s value fell by 15.5pc the growing public and political outrage led to mounting speculation that its chief executive Bob Diamond and chairman Marcus Agius could be forced within days to stand down.
Politicians and investors joined the chorus of disapproval of the bank’s admission that it attempted to manipulate the Libor borrowing rate for several years.
Investors last night were reported to be demanding a meeting with the bank’s senior independent director, Sir Michael Rake. Martin Taylor, a former chief executive of the bank, described the findings against Barclays as showing a “policy of systematic dishonesty”.
“It’s hard to believe that a policy which seems so systematic was not known to people at or near the top of the bank,” added Mr Taylor.
David Cameron said Mr Diamond had “serious questions to answer”. The Prime Minister said: “I think the whole management team have got some serious questions to answer. Let them answer those questions first.”