Surprise as Barclays lose rough Diamond

Bob Diamond, the high-profile chief executive of bank powerhouse Barclays, who had pledged to change the bank’s internal culture after a rate-rigging scandal, has abruptly quit his post.

Under fire from politicians and regulators, Diamond become the highest-profile casualty of controversy on manipulating interest rates that spans more than a dozen banks across the world.

“The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen,” said the 61-year-old said of the famous bank that welcomed investment from investors from Abu Dhabi and Qatar at the height of the 2008 financial crisis.

His resignation was a sudden reversal, hours after he said it was down to him to clear up the mess at Britain’s third-largest bank, which was fined more than $450 million for its part in manipulating a global benchmark interest rate. Diamond sent a letter to staff on Monday showing his resolve to continue. But he quit after Prime Minister David Cameron set up a parliamentary inquiry.

Politicians and newspapers have zeroed in on the scandal - which revealed macho e-mails of bankers congratulating each other with offers of Champagne - as an example of a rampant culture of wrongdoing in an industry that stayed afloat with huge taxpayer bailouts. Diamond’s resignation was “a first step towards that change of culture, that new age of responsibility we need to see”, British finance minister George Osborne said yesterday.

The reversal was a shock within the bank, which in recent years has boasted an aggressive culture cultivated by Diamond, first as head of investment banking and then as CEO. One Barclays banker said staff were disappointed.

“Everyone here has been bandying around names, but it’s going to be hard to find someone of the same quality as Bob,” he said.

Reports suggested Diamond is threatening to reveal potentially embarrassing details about Barclays’ dealings with regulators.

David Archer, a headhunter, said he had been contacted by top Barclays employees exploring their own options since Diamond’s resignation.

Barclays’ share price was up 3.5 per cent in midmorning London trading as investors hoped some of the heat will have been taken out of the scandal.

In January last year, Diamond memorably told a House of Commons committee: “There was a period of remorse and apology for banks. I think that period is over.”