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Rediff.com  » Business » Barclays CEO Bob Diamond resigns on interest rate scam

Barclays CEO Bob Diamond resigns on interest rate scam

July 03, 2012 16:33 IST

Barclays Plc on Tuesday said its chief executive officer Bob Diamond has resigned with immediate effect after increasing pressure to step down following global interest rate manipulation scandal.

The move follows the decision by Barclays Chairman Marcus Agius to quit on Monday, although he would stay in office until a succession plan is in place.

Both the executives had come under intense pressure to quit after the British bank was slapped with 290 million pound (USD 451 million) fine by the US and the UK authorities to settle the charges of manipulating global benchmark lending rates.

Diamond, who has served as the company for 16 years, resigns as CEO and a Director of Barclays with immediate effect, Barclays said in a statement.

"The external pressure placed on Barclays has reached a level that risks damaging the franchise – I can not let that happen," Diamond said, adding that he was "deeply disappointed by the impression created by last week's events".

The bank said Agius would stay in his position until the hunt for a chief executive is completed. He would chair the Barclays Executive Committee pending the appointment of a new Chief Executive and he would be supported in discharging these responsibilities by Deputy Chairman Michael Rake.

"The search for a new Chief Executive will commence immediately and will consider both internal and external candidates. The businesses will continue to be managed by the existing leadership teams," Barclays said.

Last week, Barclays had agreed to pay 290 million pounds worth penalties to the US and the UK authorities towards settling charges of attempting to manipulating Libor and Euribor rates, the global benchmark rates for lending.

The regulator had pointed out that Barclays' senior management and multiple traders were involved in the matter and that they also coordinated with traders at other banks to make false reports concerning both benchmark interest rates to benefit derivatives trading positions.

The information was used in determining the London interbank offered rate, Libor, and Euribor, which influence many other interest rates.

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 Banker's Association (BBA).

Generally, it reflects the cost of borrowing unsecured funds in the London interbank market.

Euribor, also calculated in a similar manner, measures the cost of borrowing in the Economic and Monetary Union of the European Union.

On Monday, the bank said it would launch an audit of its business practices, led by Rake and a panel of non-executive Directors.

Image: Bob Diamond

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