Barclays Boss Diamond Finally Steps Down

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Barclays (LSE: BARC.L - news) boss Bob Diamond and another member of his top team have quit their posts amid the growing rate-rigging scandal.

But as Mr Diamond finally stepped down he made potentially explosive accusations, implicating the Bank of England in the controversy.

Chief executive Mr Diamond and Chief Operating Officer Jerry del Missier, who was later directly-linked to the scandal by the bank itself, fell on their swords 24 hours after Marcus Agius announced his intention to resign as chairman.

In an interview with Sky's Jeff Randall, Mr Agius said Mr Diamond's resignation came after the "elastic snapped".

"I think Bob concluded that it wasn't going to get better at any time soon and that the right thing for him to do was to resign," Mr Agius said.

Today, in an extraordinary series of events, Mr Agius was appointed full-time chairman until a date to be fixed to lead the search for Mr Diamond's successor as the fallen chief executive faced a battle to retain almost £20m in bonuses.

In a conference call with journalists, Mr Agius later moved to provide some clarity on the role of Barclays' management in the scandal, claiming Mr del Missier was the most senior Barclays executive to instruct staff to lower Libor lending rates between banks to make Barclays appear strong.

However, he refused to comment on a report that this happened because Barclays was told in October 2008 by the deputy governor of the Bank of England Paul Tucker that Barclays did not have to submit its Libor rates as high as it had done.

That allegation apparently referred to an internal memo sent by Mr Diamond following a conversation he had with Mr Tucker.

The document is also said to have included information suggesting that Mr Tucker had been contacted by "senior" figures in Whitehall, questioning Barclays' Libor rate requests.

In his interview with Randall, Mr Agius said he had known personally about Libor rate fixing in his bank for "more than two years".

The twists and turns of the day's events were reflected in the company's share price which fell 4% before recovering much of that ground to close 0.8% down on the day.

Mr Diamond's resignation was unexpected in that he had made it clear to staff in a memo on Monday that he had no intention of leaving his post - saying it was his responsibility to restore the bank's reputation.

But it is understood he changed his mind on Monday night during or following a conversation involving Mr Agius and the bank's deputy chairman Sir Michael Rake over the intense political pressure on Barclays.

The scandal came to light when Barclays was fined £290m by UK and US regulators last week.

It has since emerged that an estimated 12 other lenders in the UK and elsewhere in the world are also under investigation.

The American, who had faced mounting calls to step down, said this morning: "The external pressure placed on Barclays has reached a level that risks damaging the franchise."

"My motivation has always been to do what I believed to be in the best interests of Barclays. No decision over that period was as hard as the one that I make now to stand down as chief executive."

He went on: "I know that each and every one of the people at Barclays works hard every day to serve our customers and clients.

"That is how we support economic growth and the communities in which we live and work."

Mr Diamond, who was the best-paid chief executive on the FTSE 100 (Euronext: VFTSE.NX - news) last year at almost £21m, confirmed he would still appear before the Treasury Select Committee of MPs (BSE: MPSLTD.BO - news) on Wednesday to answer questions over the rate-fixing scandal, which led to the Government on Monday announcing a parliamentary inquiry into the banking culture.

Barclays is conducting its own internal review into what it called 'flawed' business practices while the Serious Fraud Office is also investigating the prospect of criminal charges.

While the Financial Services Authority (FSA) has no powers to bring a criminal case, the City watchdog's chairman Lord Turner was scathing in his comments on the Libor scandal at the FSA's annual meeting in London today.

He said: "The cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits has justifiably shocked and angered people, in particular when we are facing hard economic times provoked by
the financial crisis.

"But, sadly, it is clear that the behaviours evidenced in the Libor case were not, in the years before the crisis, confined to this specific area of financial activity."

Politicians also moved swiftly today to seize on Mr Diamond's departure.

Chancellor George Osborne said the resignation was "the right decision for Barclays" and the "right decision for the country".

Labour leader Ed Miliband declared: "This was necessary and right" and repeated his call for a judicial inquiry while Deputy Prime Minister Nick Clegg said it was "the right decision".

He continued: "People will now want us to get on with the inquiry and take further action fast to ensure that people and businesses are protected."

Mr Agius, who was the subject of a tribute from Mr Diamond after his own now-revoked resignation on Monday, gave a more glowing endorsement of Mr Diamond's performance saying: "Bob Diamond has made an enormous contribution to Barclays over the last 16 years of distinguished service to the group."

He said he had built Barclays Investment Bank into one of the leading global investment banks in the world.

"As chief executive he has led the bank superbly," Mr Agius declared.

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