Robert Diamond, the architect of Barclays Plc's investment banking expansion, stepped down as chief executive officer after the bank admitted to rigging global interest rates.
Diamond, 60, will step down with immediate effect, the London-based bank said in a statement today. Diamond became CEO of Barclays on Jan. 1, 2011 after joining the bank in 1996. Marcus Agius, who said yesterday he would step down, will become full-time chairman and lead the search for a new CEO.
"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," Diamond said in the statement.
Diamond had yesterday defied pressure to quit, pledging to implement the findings of a review into how the bank sets the London interbank offered rate. Barclays was hit by a record 290 million-pound ($455 million) fine last month for rigging the benchmark. He and Agius are the most senior bankers to announce their departures so far following probes by global regulators.
"There comes a point in time when the board says enough is enough and it became very personal in terms of the criticism," said Christopher Wheeler, a London-based banking analyst at Mediobanca SpA. "It allows the bank to draw a line. The priority now is to find an appropriate chief executive who has not been affected by all this."
Diamond joined Barclays in 1996 and ran the London-based bank's securities unit during which the Libor manipulation occurred. He lost the contest for the CEO post to John Varley in 2003 and became president of the bank in 2005. He stayed, and by 2007, his Barclays Capital unit accounted for 31 percent of pretax profit. Varley stepped down in 2010, clearing the way for Diamond to replace him.
Diamond became the public face of both the company and the industry, being branded the "unacceptable face of banking," by the-then Business Secretary Peter Mandelson in 2010 over his compensation. His 12 million-pound remuneration, including a 5.75 million-pound payment toward his personal tax bill last year, made him Britain's top-paid bank CEO. In January 2011 he told Parliamentarians that the time for "remorse and apology" for banks needed to be over, prompting political outcry.
His tenure as CEO has been marred by disputes with regulators, some of which he inherited from his predecessors: the first was over the mis-selling of payment-protection insurance to customers, the second over tax-avoidance plans the Treasury described as "abusive," and the third over improper sales of derivatives to customers. At the same time, Diamond regularly called on banks to be more "effective citizens."
His departure may stoke speculation the lender may divide its consumer and investment banking operations.
"The problem is the bank is so big," said John Smith, a senior fund manager at Brown Shipley & Co., which manages 2.3 billion pounds including Barclays shares. "It's getting beyond making money for themselves, you're taking risks with the U.K. economy, people's savings, and not just shareholders' capital."