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Diamond quits amid rate-rigging row

Barclays chief executive Bob Diamond has resigned with immediate effect as the controversial banker admitted the rate-rigging scandal threatened the bank's future.

The American, who has worked for Barclays for 16 years, buckled under pressure to step down from politicians, shareholders, financial campaigners and former directors.

Chancellor George Osborne, who had unveiled a parliamentary probe into banking standards, welcomed the move as the "right decision" for the bank and for the country.

Despite mounting calls for his departure, Mr Diamond's exit came as a shock as he had showed no signs of leaving his position after pledging to see an internal review through to the end.

Barclays has been at the centre of a gathering storm over banking ethics after it was last week fined £290 million by UK and US regulators for manipulating the Libor, the rate at which banks lend to each other. Chairman Marcus Agius, who resigned over the affair on Monday, will remain with the bank to lead the search for a new chief executive before stepping down at a later date.

Mr Diamond, who was once dubbed the "unacceptable face of banking" by Lord Mandelson, was in charge of the bank's investment arm, Barclays Capital, when staff attempted to influence the key interbank lending rate.

However, the 60-year-old, who confirmed he will still appear before the Treasury Select Committee on Wednesday, remained defiant in his resignation statement: "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. My motivation has always been to do what I believed to be in the best interests of Barclays."

Speaking after Mr Diamond's resignation, Mr Osborne said: "I think he has clearly taken the view that Barclays has a better future without him than with him."

Labour leader Ed Miliband welcomed the decision but continued to call for a full judicial inquiry into banking culture. He said: "This was necessary and right. It was clear Bob Diamond was not the man to lead the change that Barclays needed. But this is about more than one man - this is about the culture and practices of the entire banking system, which is why we need an independent, open, judge-led public inquiry."

Barclays' shares fluctuated wildly after the announcement as investors weighed up the shock decision. Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: He went on: "Discussions at the Treasury Select Committee should throw some light on the internal turmoil at the bank, while it remains to be seen whether Barclays will eventually end up with some credit in being the first to hold its hand up over the Libor investigations."

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