Barclays’ chief executive, Robert E. Diamond Jr., announced his resignation today. Diamond’s departure comes after increasing criticism and mounting political pressure, nearly a week after Barclays paid out $450 million to settle accusations by various regulators that the British bank tried to manipulate interest rates for its own benefit.
Diamond is the latest in a series of Barclays executives to step down recently. Jerry del Missier, who was promoted to chief operating officer position just a month ago, also resigned today, and Marcus Agius, the bank’s chairman, stepped down earlier this week. Agius, however, will remain at Barclays to head the bank’s executive committee until a new chief executive is appointed.
Although Diamond no longer heads the bank, he is expected to face continued scrutiny as he testifies Wednesday before a British parliamentary committee. Here in the U.S., Diamond is expected to face questions from local politicians over his involvement in the alleged rate manipulation scandal that led to the nearly half a billion dollars in fines from the Justice Department, Commodity Futures Trading Commission, and the Financial Services Authority.
According to sources familiar with the matter, Diamond’s top managers told employees in 2007 and 2008 to report artificially low rates in an effort to inflate the public’s perception of the bank’s health at the height of the financial crisis. Barclays had declined to comment on Diamond’s involvement.
Regulatory authorities accused the bank of manipulating the London interbank offered rate, or LIBOR, by reporting the artificially low rate. LIBOR measures the uniformity of interest rates offered by the top banks in London. The rate is subsequently used to determine the cost of approximately $350 trillion in financial products ranging from credit cards to mortgages.
Although Barclays is the first to settle with authorities over LIBOR accusations, it may not be the last. Authorities are investigating other major firms such as Citigroup, Deutsche Bank, and UBS on similar charges.