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July 03, 2012 at 06:21 AM
A day after he insisted he had no intention of stepping down, Bob Diamond resigned as head of Barclays Bank effective immediately, bowing to pressure from lawmakers outraged over the manipulation of Libor rates on his watch. Questions arose over what regulators knew and when they knew it as reports of whistleblowers from within the bank itself surfaced, and political leaders promised a criminal investigation.
Bloomberg reported Tuesday that Diamond, CEO of Barclays, was the second to go after Chairman Marcus Agius tendered his own resignation on Monday. Agius was to remain in place to insure an orderly succession, and now he will become full-time chairman to search for a replacement for Diamond.
Other heads may roll as the scandal unfolds; COO Jerry del Missier, appointed only last month, may follow Diamond out the door, according to a Reuters report. Del Missier was reported to be close to Diamond, and to have helped his boss build up the Barclays Capital investment bank.
Diamond had insisted that he would remain to implement whatever reforms were necessary to erase the image of Libor rigging. But political pressure, according to a BBC report, became too great, and Diamond instead announced his resignation. In a statement, he said, “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.”
Despite an emergency board meeting Friday night, during which it was decided that neither Agius nor Diamond need resign, Agius took it upon himself to become the focus of criticism of the bank and step down, said Robert Peston, business editor at the BBC.
But instead of quieting the storm, Agius’s departure had little effect and political leaders continued to call not just for Diamond’s departure but for broader investigations. Both Agius and Diamond are scheduled to testify before Parliament during the week.
Said Peston, “[O]ne Barclays source tells me [Diamond] felt hounded out by MPs. He felt the government’s planned parliamentary inquiry about standards in banking would be all about him, as would a longer judicial investigation demanded by Labour.”
But that wasn’t all, continued Peston; investors were out for blood as well: “[T]he price they were demanding for him to stay and clean up the bank was that he should surrender some of the vast rewards he had accumulated from a culture at the bank now acknowledged to be flawed—and which investors hold him partly responsible for.”
The price was high: “[E]ither a clawback of past bonuses and spoils from long-term incentive schemes, or the surrender of what he could earn from long term incentive plans that haven’t yet vested.” Peston cited the consultancy Manifest as estimating that toll at as much as 16 million pounds ($25.080 million).
