Barclays chief executive Bob Diamond and the bank's chief operating officer, Jerry del Missier, have both quit their jobs following a financial markets scandal that has also seen the bank's chairman announce his intention to resign, and sown the seeds for another investigation into Britain's banking sector.
The bank said Tuesday that Chairman Marcus Agius would lead the search for a successor to Diamond, who has resigned with immediate effect. Agius still intends to stand down once a new chairman has been chosen, a spokesperson at Barclays said.
Del Missier, a Canadian, was appointed chief operating officer just two weeks ago ago to lead a restructuring at Barclays.
Documents released by Barclays bank say that del Missier was responsible for ordering others to report lower than actual borrowing rates.
The bank released a memo by Diamond recounting a conversation with a Bank of England official. Barclays said Diamond discussed the call with del Missier, who wrongly concluded that the Bank of England had instructed Barclays to keep its submissions lower.
Fined last week
Barclays' management has come under fire since the bank was fined $453 million US last week by U.S. and British regulators for submitting false reports on interbank borrowing rates between 2005 and 2009. Much of that activity originated from traders in Barclays Capital, the investment banking division which Diamond headed at the time.
Britain's Serious Fraud Office said Monday that it would decide within a month whether to pursue criminal charges in the case. The government, which has come under pressure to initiate a judge-led inquiry into the sector, has announced a parliamentary committee to investigate what went on and report back by the end of the year.
"The external pressure placed on Barclays has reached a level that risks damaging the franchise — I cannot let that happen," Diamond 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."
As well as facing intense media pressure over the past few days, Diamond has seen growing calls for his resignation from the political world. Both Deputy Prime Minister Nick Clegg and opposition Labour Party leader Ed Miliband called for Diamond, a 60-year-old American, to stand down.
George Osborne, Britain's Treasury chief, said Diamond had decided to go Monday night. Osborne said he was told by Agius that "the board had come to view that that was the right decision and Mr. Diamond had come to that view."
"I think it is the right decision for Barclays, I think it is the right decision for the country," Osborne said.
The bank said Agius, 65, would become full-time chairman and would chair the executive committee until a new CEO is appointed.
Diamond's position seemed secure
"Clearly there's a lot more to come from this story right across the sector, but that's a significant scalp to be taken at this stage and now leaves a looming succession issue for the bank," said Mike McCudden, head of derivatives at Interactive Investor.
Some analysts had thought Diamond's position was secure because there was no obvious successor in the wings.
Diamond said he still intended to face the House of Commons Treasury Committee on Wednesday to give the bank's explanation for the false interest rate reports.
Barclays is one of a number of banks which regularly submit estimates of what it will cost them to borrow from other banks. These estimates feed into a calculation of the London interbank offered rate (LIBOR) which is used to determine payments from a range of financial contracts.
The London rate, and the related European interbank offered rate, are the benchmarks for over $500 trillion in global contracts, including loans and mortgages.
Barclays admitted that it had submitted lower than actual figures on its interbank borrowing during the credit crisis in 2007 and 2008. Several other global banks are being investigated in other countries for similar actions.
Last week, Diamond announced that he and three other senior executives were waiving any bonuses for 2012 because of the rate scandal.
The financial terms of his departure were not immediately disclosed.
His departure came as a surprise to many.
On Monday, Diamond sounded like a man determined to keep his job. In a memo to staff, he said he was disappointed by the misbehaviour which led to the massive fines, but said: "It is my responsibility to make sure that it cannot happen again."
Diamond built up Barclays Capital into a profit-spinning powerhouse, and scored an important coup during the financial crisis by buying the remains of Lehman Brothers U.S. operations in a $1.35 billion deal.
Barclays survived the credit crisis without resorting to the kind of taxpayer bailout which saved Lloyds Banking Group and Royal Bank of Scotland, relying instead on an injection of capital from Qatar Holding, the government-backed investment fund.
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."