Business, Finance & Economics

Barclays CEO Bob Diamond quits

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Bob Diamond on October 25, 2010 in London, England. The Barclays chief executive has resigned over a rate-fixing scandal at the bank.

Credit:

Dan Kitwood

Barclays chief executive Bob Diamond has quit, amid a scandal over traders' attempts to manipulate inter-bank lending rates.

"The external pressure has reached a level that risks damaging the franchise – I cannot let that happen," Diamond said in a statement announcing his immediate departure.

Barclays chairman, Marcus Agius, resigned yesterday, saying: "The buck stops with me." 

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His resignation didn't stop the calls for Diamond's head, however. According to the BBC, both the Bank of England and the British banking regulator, the Financial Services Authority (FSA), made it clear that they wanted Diamond to go – pressure that, the BBC's business editor Robert Peston says, the Barclays board found "impossible" to ignore.

The government welcomed the announcement, with Chancellor George Osbourne describing Diamond's resignation as "the right decision for Barclays and the right decision for the country."

"I hope it's the first step towards a new culture of British banking," Osbourne told BBC Radio 4's Today program.

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The revelations that Barclays traders lied about the bank's estimated borrowing costs, first trying to raise them for profit and then seeking to lower them to make the firm appear a better lending prospect, have been greeted with outrage.

In response to the scandal, which is thought to involve several other large banks in Britain, Canada and the US, British Prime Minister David Cameron yesterday announced an inquiry into banking practices at Barclays and other firms, the Financial Times reported

Diamond said he would appear tomorrow as scheduled before a parliamentary committee to answer questions on the affair.

Agius will be in charge of running Barclays while successors are found for both him and Diamond, the bank said.

No details of Diamond's severance package have been released; according to the Wall Street Journal, his contract entitles him to six months' salary. Diamond was paid £1.35 million ($2.12 million) last year.

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