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Barclays (NYSE:BCS) chief executive Bob Diamond resigned on Tuesday, barely hours after saying he wanted to stay to clear up the mess created by the interest rate controversy at the bank. Calls for Diamond’s departure had stayed incessant as Britain’s third-largest bank deals with being at the center of a multi-bank probe regarding manipulation of a global benchmark interest rate. Investigations have resulted in a fine of nearly half a billion dollars for the bank and had already sparked the resignation of chairman Marcus Agius on Monday.
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“The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen,” Diamond said in a statement. He added that he was “deeply disappointed that the impression created by the events of last week about what Barclays and its people stand for could not be further from the truth.”
On Monday, he had written a letter to his staff saying it was his resolve to continue. Diamond changed his mind after British Prime Minister David Cameron and finance minister George Osborne announced a parliamentary inquiry into the scandal. The former CEO is set to appear this week, along with Agius, before the committee.
The Financial Times reported that Diamond was threatening to reveal embarrassing details about Barclays’ dealings with regulators if he comes under fire at the parliamentary committee hearing on Wednesday.
Barclays has admitted to submitting artificially low estimates of its borrowing costs to calculate interbank rates from late 2007 to May 2009. Banks’ estimates of these costs are used to calculate the London Interbank Offered Rate, or Libor, the basis for trillions of dollars in contracts around the globe. Barclays says it submitted low figures because it thought rivals were doing the same and higher submissions would have made it seem like it was in financial trouble. Diamond was directly head of investment bank division Barclays Capital when his staff tried to manipulate the interbank rates.
Outgoing chairman Marcus Agius will lead the search for a new chief executive. Anthony Jenkins, currently chief executive of Barclays retail and business banking, is the most likely internal candidate to replace Diamond, according to analysts. Other names in the fray include former JPMorgan investment banking co-head Bill Winters and Naguib Kheraj, the ex-Barclays finance director and former CEO of JPMorgan Cazenove.
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