Barclays’ CEO Steps Down, Chairman Returns

Barclays PLC Chief Executive Bob Diamond resigned Tuesday in a surprise move that saw Marcus Agius return as full-time chairman one day after he himself had resigned.

“The search for a new chief executive will commence immediately and will consider both internal and external candidates,” Barclays said in a statement.

Diamond had come under increasing pressure to step down as the U.K. government announced a series of inquiries into ethical standards in the banking industry and as the U.K. Serious Fraud Office said it was mulling criminal prosecutions against those who attempted to rig interbank lending rates.

On Monday, Barclays promised to launch an independently led audit of its business practices as Agius confirmed reports he would resign, taking responsibility for last week’s US$453 million settlement of an interest-rate manipulation probe.

Agius sought to deflect pressure from Diamond, saying that the “buck stops with me.” He also stepped down as chairman of the British Bankers’ Association, the trade body runs the Libor rate.

Diamond’s resignation is effectively immediately.

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.”

Barclays said that Agius’ resignation as chairman would stand. He will stay on to head the Executive Committee and lead the search for new CEO.

Gary Greenwood, analyst at Shore Capital, said: “This is a massive u-turn. I can’t remember anything like this happening before, but ultimately they’ve reached the right decision. Diamond was a key drag to sentiment and bowed to ongoing shareholder and political pressure.

“Agius standing down yesterday looked to some like a dereliction of duty,” the analyst added. “In times of difficulty, you want the chairman to make the tough decisions, which is why he’s come back.”

Barclays’ shares opened down 3% after the Diamond announcement, Market Watch reported.