The memo says CEO Bob Diamond had a conversation with BoE deputy governor Paul Tucker, who questioned why Barclays was towards the high end of Libor pricing.
Diamond took notes on the phone call in October 2008, which said Whitehall had begun questioning the pricing.
“Further to our last call, Tucker reiterated 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,” it said.
“His response was ‘you have to pay what you have to pay.’ I asked if he could relay the reality, not all banks were providing quotes at the levels that represented real transactions, his response was: ‘Oh, that would be worse’.”
Diamond is due to speak to MPs today about the LIBOR scandal, with reports suggesting he is preparing to reveal the extent to which the authorities knew about banks’ manipulation of the rate at which they borrowed.
He resigned from his post yesterday following pressure from shareholders, BoE governor Mervyn King and regulators.
Last week it was revealed Barclays had been fined a record £290m in the UK and US for manipulating LIBOR rates.
In the memo to the Treasury, Diamond tried to explain the higher pricing in his notes: “I explained again our market rate driven policy and 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.”
The memo continued: “Tucker stated the levels of calls he was receiving from Whitehall were ‘senior’ and while he was certain we did not need advice, that it did not always need to be the case that we appeared as high [on LIBOR] as we have recently.”
The Bank of England has declined to comment on the memo.
