Barclays Plc (BCS: Quote,BARC.L) on Tuesday said Bob Diamond has resigned as chief executive and a director of the company with immediate effect. The move comes less than a week after the lender was fined 290 million pounds for attempting to manipulate the inter-bank lending rate.
Diamond said, "I joined Barclays 16 years ago because I saw an opportunity to build a world class investment banking business...No decision over that period was as hard as the one that I make now to stand down as Chief Executive. The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen."
Marcus Agius, who had announced his resignation as chairman on Monday, will become full-time Chairman and will lead the search for a new chief executive. The company said the search for a replacement will commence immediately, while the businesses will continue to be managed by the current leadership teams.
Agius will chair the Barclays Executive Committee, pending the appointment of a new CEO. He will be supported in discharging these responsibilities by Deputy Chairman Sir Michael Rake.
Last Wednesday, Barclays agreed to pay 290 million pounds to US and UK regulators to settle allegations that the company's employees tried to manipulate key global benchmark interest rates.
The resolution was part of an industry-wide investigation by authorities that several banks, including Barclays, sought to manipulate the London Interbank Offered Rate, or Libor, and the Euro Interbank Offered Rate, or Euribor. The fine prompted Diamond and three other executives to voluntarily forgo their bonuses for this year.
"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...I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question," Diamond added.
Monday, Barclays' Board agreed to launch an audit of its business practices. It will be led by an independent third party reporting to Sir Michael Rake and a panel of Non-Executive Directors. The audit will be part of a broader program of activity meant at restoring Barclays' reputation.
The scandal is seen as a fresh blow to UK's troubled banking sector, following massive bailouts paid for by taxpayers in the wake of the financial crisis.
Libor is based on rate submissions from a relatively small and select panel of major banks, including Barclays, and is calculated and published daily for several different currencies by the British Bankers' Association.
Libor impacts enormous volumes of swaps and futures contracts, commercial and personal consumer loans, home mortgages and other transactions.
The UK government has ordered an independent review into the inter-bank lending rate. UK Prime Minister David Cameron has said he plans to make Diamond and top executives at Barclays accountable for the scandal, while opposition Labour leader Ed Miliband has demanded a full public inquiry into banking practices. British lawmakers are set to question Diamond about the scandal on Wednesday.
In London, Barclays' shares closed on Monday higher by 3.4 percent at 168.40 pence on a volume of 100.57 million shares, compared to the 3-month average volume of 51.11 million shares. The shares are currently down 0.3 percent at 167.85 pence.
In the US, the shares closed higher by 4.6 percent at $10.77 on 5.86 million shares.
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by RTT Staff Writer
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