LONDON, (Reuters) – Barclays Plc Chief Executive Bob Diamond quit today under a barrage of fire from politicians, the highest-profile casualty of an interest rate-rigging scandal that spans more than a dozen major banks across the world.
“The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen,” said Diamond, 61.
His resignation was a sudden reversal, hours after he said it was down to him to clear up the mess at Britain’s third-largest bank, fined nearly half a billion dollars for its part in manipulating a global benchmark interest rate.
Diamond will appear before a parliamentary committee probing the scandal tomorrow, at which he could reveal details about the bank’s dealings with regulators over the affair.
He had sent a long letter to staff on Monday showing his resolve to continue. But he decided to quit later that day after Prime Minister David Cameron and finance minister George Osborne announced a parliamentary inquiry into the scandal, a person familiar with the matter said.
Politicians and newspapers have zeroed in on the scandal – which revealed macho e-mails of bankers congratulating each other with offers of champagne for helping to fiddle figures – as an example of a rampant culture of wrongdoing in an industry that stayed afloat with huge taxpayer bailouts.
Diamond’s resignation was “a first step towards that change of culture, that new age of responsibility we need to see”, Osborne told BBC radio.
“The chairman of Barclays phoned me last night to let me know that this was the decision of the board and of Mr Diamond, and I think Mr Diamond made the right decision,” Osborne said.
Outgoing chairman Marcus Agius will lead the search for a new CEO, despite having announced his own imminent departure a day earlier, declaring that “the buck stops with me”.
Newly appointed Chief Operating Officer Jerry del Missier, who has for years been a Diamond lieutenant, was also likely to quit, a source familiar with the situation said.
At the time of the misdeeds, Diamond was not yet CEO but was in charge of the investment banking division, where he was known for fostering an aggressive culture.
Barclays has admitted it submitted artificially low estimates of its borrowing costs to calculate interbank rates from late 2007 to May 2009. Large banks’ estimates of how much interest they have to pay to borrow from one another are used to calculate the London Interbank Offered Rate, or Libor, the basis for trillions of dollars in contracts around the globe.
By manipulating the figures, banks could make their balance sheets look better. Barclays says it submitted low figures because it thought rivals were doing the same and higher submissions would have made it appear to be in trouble.
