Barclays chairman Quits Over Loan Rates Scandal

Barclays on Monday announced the resignation of its chairman, Marcus Agius, in the widening scandal surrounding the bank’s manipulation of interbank lending rates in 2008 and 2009.

In a statement to the London Stock Exchange, Agius said the scandal has “dealt a devastating blow” to Barclays’ reputation.

“As chairman, I am the ultimate guardian of the bank’s reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside,” he added.

Barclays was fined US$450 million last week by British and U.S. regulators 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.

Authorities are also investigating other banks, with Royal Bank of Scotland (RBS) understood to have fired some of its traders involved in LIBOR, according to British media reports.

Britain’s Financial Services Authority on Friday said the law must be tightened to deal with abuses, while 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.

Meanwhile, Agius will stay on as chairman while the board searches for his replacement. Chief Executive Bob Diamond is also facing calls to resign.

Both Diamond and Agius are expected to appear before a UK parliamentary committee later this week to face questions about the saga.

The bank says it will also launch an audit into all of its past business practices and has vowed to make its findings public.

Barclays will also introduce a mandatory code of practice to be applied across the entire bank, CNN reported.