Robert Diamond, the one-time chairman of Barclays Global Investors who later became the architect of Barclays PLC’s investment banking expansion, resigned as CEO, succumbing to political pressure to go after the bank admitted to rigging global interest rates.
Mr. Diamond will step down immediately, Barclays said in a statement Tuesday, a day before he faces questions by British lawmakers.
Mr. Diamond became CEO of Barclays on Jan. 1, 2011. Marcus Agius, who on Monday said he planned to step down, will become full-time chairman and lead the search for a new CEO.
Barclays was hit by a record £290 million ($455 million) fine last week for rigging the benchmark for more than $360 trillion of securities. Mr. Diamond on Monday pledged to implement the findings of a review into how the bank sets the London interbank offered rate. U.K. regulators are weighing whether to start criminal probe into LIBOR-fixing.
Messrs. Diamond and Agius are the industry’s most senior executives to announce their departures following the probes.
“The external pressure placed on Barclays has reached a level that risks damaging the franchise,” Mr. Diamond said in the statement. “I cannot let that happen. 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.”
Mr. Diamond stepped down a day after the government announced a parliamentary inquiry into the U.K. banking industry. He is due to be questioned by British lawmakers on the Treasury Select Committee on Wednesday. George Osborne, U.K. chancellor of the exchequer, welcomed Mr. Diamond’s resignation, saying in a radio broadcast he hoped it would be the first step toward a “new culture of responsibility” in British banking.
U.K. and U.S. regulators found Barclays “systematically” attempted to rig the London and euro interbank offered rates for profit. LIBOR, which is determined by 18 banks’ daily estimates, is the benchmark for more than $360 trillion of securities, including mortgages, student loans and swaps.
“I don’t think anybody should underestimate the seriousness of this,” said Dominic Rossi, chief investment officer for equities at Fidelity Worldwide Investment, one of Barclays’s 10 biggest shareholders.
Mr. Diamond ran the London-based bank’s securities unit when the LIBOR manipulation occurred. He lost the contest for the CEO post to John Varley in 2003 while chairman of BGI but received the added title of bank president in 2005. Mr. Varley stepped down in 2010, clearing the way for Mr. Diamond to replace him. BlackRock acquired BGI in 2009.
“I joined Barclays 16 years ago because I saw an opportunity to build a world-class investment banking business,” Mr. Diamond said in Tuesday’s statement. “We built world-class businesses together and added our own distinctive chapter to the long and proud history of Barclays.”