The chief executive of Barclays, one of the world’s largest banks, is resigning in the wake of a scandal, Barclays announced Tuesday.
Bob Diamond’s resignation is effective immediately, the bank said.
Barclays’ reputation has been hammered by a scandal around the rates at which banks lend each other money, known as Libor.
The bank was fined $450 million last week by British and American regulators for rate-fixing during the height of the global financial crisis, and is one of a host of banks facing lawsuits in New York over the scandal.
British Chancellor George Osborne welcomed Diamond’s resignation, calling it the right decision for the bank and the country.
“We need our banks to be focused on lending to the economy, not on the scandals of the past, and I hope this will be the first step towards a new culture of responsibility in British banking which is what the British people want to see,” said Osborne, effectively the country’s finance minister.
British Prime Minister David Cameron said Monday that a full parliamentary inquiry would be held into the Libor rate-fixing scandal and standards in the banking industry, with witnesses called to give evidence under oath.
The chairman of the Financial Services Authority, Britain’s banking regulator, last month blasted the “cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits.”
FSA chairman Adair Turner said the scandal “has caused a huge blow to the reputation of the banking industry” and “has justifiably shocked and angered people.”
Diamond is due to to testify before the British parliament’s Treasury Committee on Wednesday.
The resignation of the American-born Diamond comes a day after Barclays chairman Marcus Agius announced his own resignation over the lending-rate scandal.
But Agius reversed his decision on Tuesday and will lead the search for a new chief executive, Barclays said.
Barclay’s is the 15th largest bank in the world, according to an annual list of the world’s top 1000 banks released by The Banker magazine on Monday.
It is Britain’s second most profitable bank, and the 18th most profitable in the world, the trade magazine said.
Diamond said he always aimed “to do what I believed to be in the best interests of Barclays.”
“No decision over that period was as hard as the one that I make now to stand down as chief executive. 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 issued by the bank.
“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. I know that each and every one of the people at Barclays works hard every day to serve our customers and clients. That is how we support economic growth and the communities in which we live and work.
“I leave behind an extraordinarily talented management team that I know is well placed to help the business emerge from this difficult period as one of the leaders in the global banking industry.”
“Bob Diamond has made an enormous contribution to Barclays over the last 16 years of distinguished service to the Group, building Barclays Investment Bank into one of the leading global investment banks in the world,” Agius said in the statement.
The $450 million fine came after the bank admitted some of its trading desks purposely under-reported its interest rates as part of LIBOR (London interbank Offered Rate) — an interest rate floor between big banks that is set in London each trading morning.
Last week, Bank of England Governor Mervyn King attacked British banking culture, saying something had gone very wrong with an industry he derided for resorting to “deceitful” methods to make money.
CNN’s Paul Armstrong, Jim Boulden and Isa Soares contributed to this report.
