Barclays CEO resigns amid rate-fixing scandal
NEW YORK — Barclays’ rate-fixing scandal claimed its biggest casualty so far: Chief Executive Robert E. Diamond Jr., who resigned on the eve of a new investigation into the bank’s operations by a committee of the British Parliament.
After resisting pressure to leave, Diamond resigned Tuesday and left immediately, a week after the bank announced it would pay $453 million in fines to U.S. and British authorities for its attempts to manipulate key interest rates, including the London interbank offered rate, or LIBOR.
Following Diamond out the door hours later was Jerry del Missier, appointed only last month as chief operating officer. They left only a day after Barclays Chairman Marcus Agius said he would step down as soon as a successor was named.
Agius will take over Diamond’s duties and will be part of the search committee to find replacements.
In a statement, Diamond, an American who has held the post since last year, said that stepping down as CEO was the hardest decision he had made at Barclays.
“The external pressure placed on Barclays has reached a level that risks damaging the franchise. I cannot let that happen,” Diamond said.
Diamond is scheduled to face a parliamentary committee inquiry Wednesday. British Prime Minister David Cameron has called for a parliamentary inquiry to report by the end of the year, with an eye toward reviewing banking laws and regulations.
Cameron’s proposal is staunchly opposed by the opposition Labor Party, which is demanding a wider public, judge-led independent inquiry of the type now investigating media practices and ethics in the News Corp. phone-hacking scandal.
British finance minister George Osborne welcomed Diamond’s decision, telling the BBC that it was “the right decision for Barclays and the right decision for the country.... I hope this is the first step toward a new culture of responsibility in British banking.”
Barclays’ management came under fire last week when regulators announced the fine for submitting false reports on LIBOR borrowing rates from 2005 to 2009. Much of that activity originated from traders in Barclays Capital, the investment banking division that Diamond headed at the time.
LIBOR is a benchmark the global financial industry uses to determine corporate and consumer interest rates, including those on mortgages, and is tied to other financial products such as derivatives.
Britain’s Serious Fraud Office said Monday that it would decide within a month whether to pursue criminal charges in the case.
Barclays has admitted submitting lower-than-actual figures on its interbank borrowing during the credit crisis in 2008. Several other global banks are being investigated in other countries for similar actions.
As well as facing intense media pressure, Diamond has seen growing calls for his resignation from the political world. Deputy Prime Minister Nick Clegg and Labor Party leader Ed Miliband had called for Diamond, 60, to quit.
Diamond built Barclays Capital into a profit-spinning powerhouse and scored an important coup during the financial crisis by scooping up Lehman Bros.’ U.S. operations in a $1.35-billion deal.
Barclays survived the credit crisis without seeking the kind of taxpayer bailouts that saved Lloyds Banking Group and Royal Bank of Scotland, relying instead on an injection of capital from Qatar Holding, the government-backed investment fund.
In January 2011, Diamond memorably told a House of Commons committee: “There was a period of remorse and apology for banks. I think that period is over.”
Stobart is a news assistant in The Times’ London bureau.
The Associated Press was used in compiling this report.
