Newly-published letters reveal that the Financial Services Authority felt its Libor rate-rigging investigation could affect the appointment, reports The BBC.
The FSA said it could not prejudge the appointment, but reserved the right to “reassess his suitability”.
Mr Diamond resigned in July over claims Barclays’ traders tried to rig Libor.
The letters were disclosed by the Commons’ Treasury Committee, which has taken evidence on the Libor affair from Barclays, the FSA and the Bank of England.
According to a FSA file note, there was a meeting on 15 September 2010 between the regulator’s chief, Hector Sants, and Barclays’ then chairman, Marcus Agius.
At this meeting, the FSA says it told Mr Agius that the continuing Libor investigation could have a bearing on the bank’s decision to appoint Mr Diamond.
However, Mr Diamond had already been named chief executive of the bank and took up the post in January 2011.
In a letter sent to committee chairman Andrew Tyrie on 20 August 2012, Mr Sants writes: “The FSA was fully aware that the ongoing investigation might come to conclusions which would be relevant to Mr Diamond’s suitability.
“However, at the time, since the investigation was not concluded, it would not have been appropriate to prejudge its outcome.”
Referring to the meeting with Mr Agius, Mr Sants continues: “I specifically made clear that we reserved the right to re-assess his [Mr Diamond] suitability in the light of the conclusions reached by this investigation and requested he make this clear to Mr Diamond.
“Secondly, I would like to record that in that conversation, I made clear that our concerns about Barclays’ culture were not some generic observation but specific to Barclays, and asked that these concerns be communicated by Mr Agius to Mr Diamond. Mr Agius confirmed that he would do this.”
The information appears to be at odds with comments by Mr Agius, who has said that the FSA did not cast doubt on Mr Diamond’s appointment during the meeting.
In his reply to Mr Sants’ letter, Mr Tyrie notes that FSA worries that Barclays’ culture problems were “specific” not “generic” was also “at variance with the impression we received from Mr Agius”.
Mr Diamond resigned after Barclays was fined more than £290m for rigging Libor benchmark interest rates.
