Barclays boss Diamond quits after apology

REUTERS

Former chief executive of Barclays Bob Diamond.

Barclays boss Bob Diamond, who once said it was time for bankers to stop saying sorry, apologised and quit after a market rigging scandal on his watch.

Diamond told staff he regretted what had happened and said the bank had let down customers and shareholders.

The 60-year-old stepped down with immediate effect on Tuesday, just over a year after taking the bank's top job having previously run its investment banking unit.

He succumbed to political pressure, a day before he will appear before a parliamentary inquiry into the manipulation of interbank lending rates that underpin $360 trillion of loans and financial contracts.

Only last year, when Diamond took home 17 million pounds, he thumbed a nose at politicians for attacking bankers' role in the financial crash of 2008-09.

“There was a period of remorse and apology for banks and I think that period needs to be over. We need our banks (to be) willing to take risks ... so we can create jobs,” he told a British parliamentary committee at the time.

However, authorities found that Barclays traders rigged the Libor interest rate from 2005 to 2009 while Diamond headed the British bank's investment banking operations.

“No one is more sorry, disappointed and angry about these events than I am,” he said in a letter sent to staff on Monday.

British and US regulators have fined Barclays $450 million for the scandal and are looking into the role of other banks.

Eight months ago the American argued that his industry could contribute to society by promoting economic growth and jobs. “To the question 'can banks be good citizens?' the answer must be 'yes',” he said.

Diamond conceded that many people would not believe him, but said bankers had changed their ways since the crash and he had made citizenship one of his management team's priorities.

AGGRESSIVE

Robert E. Diamond is no stranger to controversy after years of bonuses paid for what his critics call “casino banking”.

The bank's chairman Marcus Agius announced his resignation on Monday, in a bid to take the heat off Diamond but political pressure for the chief executive to go intensified.

Anger with the culture of bankers in London, a world financial capital and major part of the economy strikes a popular chord in Britain.

Prime Minister David Cameron said Diamond and other bosses at the 322-year-old bank needed to answer “serious questions”. Finance Minister George Osborne welcomed his departure, saying it was the right decision for the country.

Four months ago Barclays was also accused of running “highly abusive” tax avoidance schemes, and all British banks have been hit by a multi-billion-pound insurance mis-selling controversy.

Scrutiny in the coming days will focus on how much senior management knew, and how far company culture was to blame.

Diamond instilled an “extraordinarily competitive and aggressive” atmosphere at Barclays Capital, the bank's investment banking arm, said Martin Taylor, who was Barclays chief executive from 1994 to 1998 and sat on a commission that proposed reforms for all UK banks this year.

“When people are pushed to go to the limit - you know what traders are like - they sometimes go beyond it. They don't need to have an instruction from headquarters to go beyond it, they think it is what the bank might expect perhaps,” Taylor said.

BEST PAID BANKER

The Concord, Massachusetts-born son of two teachers joined the bank in 1996, spending most of that time building the investment bank into a debt market powerhouse, credited with reviving it from the ashes of Barclays de Zoete Wedd (BZW).

He became an investment banker almost by accident, only entering banking after two years as a lecturer in business at the University of Connecticut. After being attracted to bond trading he joined Morgan Stanley, spending 13 years there and then four at Credit Suisse First Boston, which he left to join Barclays.

Diamond missed out on the CEO's job at Barclays in 2003 and was linked with other top roles, but stayed with the London bank and in 2008 struck his boldest deal - buying the US arm of stricken Lehman Brothers. That gave him an equities and advisory ability to take on Wall Street powers such as Goldman Sachs.

His bonus has long been the lightning rod for British public and political anger over bankers' pay, and he was branded the “unacceptable face” of banking in 2010 by Peter Mandelson, a minister in the Labour government of the time.

Diamond is one of Europe's best paid bankers, and took home about 17 million pounds in salary, bonus and share awards for last year, prompting a backlash from investors that forced him to tweak his long-term pay award.

Married with three children, he has made Britain his home. After sealing the Lehman deal, he is reported to have played “God Save the Queen” over the tannoy of the bank's trading floor.

The sports fan and former football linebacker is a fan of London soccer team Chelsea, to add to his beloved Boston Red Sox, Celtics and New England Patriot teams.

He has often drawn parallels between sports and business, saying he was running a meritocracy, touring the dealing room and talking to the players. - Reuters