Bob Diamond has resigned with immediate effect as Barclays chief executive, bowing to public and political pressure over the Libor rate-setting scandal.
Marcus Agius, Barclays’ chairman who announced his resignation on Monday, will stay on temporarily to take over the running of the beleaguered bank.
“The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen,” Mr Diamond said in a statement on Tuesday.
“I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth.”
Mr Diamond decided late on Monday night to resign, according to people close to him. They said the US-born chief executive saw the reaction of shareholders and politicians to Mr Agius’s departure and realized that his position was untenable.
Mr Agius’s planned exit, which will take effect once a new chairman is found, also removed a key ally for Mr Diamond. The internal favorite to replace Mr Agius, Sir Michael Rake, may not have been so supportive.
Antony Jenkins, who runs Barclays’ retail banking operations, is seen as the most likely internal replacement for Mr Diamond as chief executive, with investment banking boss Rich Ricci also seen as a candidate. Jerry del Missier, Mr Diamond’s longtime associate who recently moved from co-head of investment banking to be chief operating officer, is not in the running for the top job. Some say he will also leave the bank.
In the meantime, Mr Agius will take over as executive chairman.
Mr Diamond is scheduled to appear before MPs on Wednesday at the Treasury select committee, which is probing Barclays’ manipulation of Libor, the rate at which banks lend to each other.
Barclays was fineda record 290 million pounds ($455 million) by UK and US regulators last week after admitting its traders sought to manipulate the rates which underpin $350 trillion of contracts across the world.
George Osborne, chancellor of the exchequer, on Tuesday told the BBC Radio 4’s Today program that Mr Diamond’s departure was “the right decision for Barclays and the right decision for the country. We need Barclays Bank focused on lending to our economy, not distracted.
“I hope it’s the first step towards a new culture of British banking.”
The chancellor said he had been told on Monday night that Mr Diamond was planning to resign, but added he had always been clear that who ran Barclays was a decision for the board, not the government.
About 20 institutions are under investigation by regulators on three continents in connection with interbank lending rates including HSBC , Royal Bank of Canada and Royal Bank of Scotland.
The Libor scandal has sparked a broader banking inquiry announced on Monday by David Cameron, the prime minister, to be headed by Andrew Tyrie, the Conservative chairman of the House of Commons Treasury select committee.
Barclays shares recovered from early falls to stand 1.6 per cent higher at 171.11p.