Leicester's deputy mayor Rory Palmer has been challenged over his stance on Barclays after it emerged the city council will be using the bank in the future.
Two years ago councillor Palmer announced the authority would be withdrawing £6 million of its reserves from the bank after its staff were found to have lied to manipulate the Libor rate, which affects the cost of lending and borrowing between financial institutions and also lending rates to the public.
The bank was fined £290 million and the scandal led to the resignation of then chief executive Bob Diamond.
Coun Palmer, at the time, said he was appalled by what Barclays had done and that the council would no longer be investing cash with them.
Now the decision of the Co-op bank to withdraw from local government banking has led the council to turn to Barclays.
Opposition Tory councillor Ross Grant said: "The deputy mayor made a huge play of condemning Barclays and there was significant national publicity around what he said.
"Now we are going back to Barclays to give them our custom.
"How does that line up with the statement he made in July 2012, when we stopped using Barclays - that we have a moral responsibility, that he was appalled by what Barclays had done and that we would not be investing with them any more?
"Is it now moral to use Barclays?"
Coun Palmer said: "I am uncomfortable with the fact that Barclays will be providing our day to day banking services.
"That is different to the situation a few years ago when that was about where we hold investments.
"I stand by the comments I made at that time and the actions we took in response to the Libor scandal which has since engulfed pretty much every other major bank."
He said the city council and other local authorities had been put in a difficult situation by the Co-op and needed at find a new banker.
Coun Palmer said: "There was a full tender exercise undertaken and there were four who ultimately expressed interest.
"Barclays at the end of that process emerged as the supplier of services that would fulfil our criteria of providing an effective banking service."
"Sometimes it comes with the responsibility of being an administration that there are decision that leave a bitter taste in the mouth but you have to deploy an element of pragmatism to secure a service the council needs.
"Ultimately we cannot hold the council's day to day cash reserves in pillowcases in the cellar of City Hall."
