Twelve hours that shook the world of banking and beyond

On Monday night he seemed immovable. The next day he was gone. So what changed Bob Diamond's mind, asks Cahal Milmo

When Bob Diamond stepped into the lift on the 31st floor of Barclays' global headquarters in London's Docklands at about 8pm on Monday night, there was no indication that it was the last time he would be seen in the bank's chic executive suite as its boss.

It had been a tumultuous day in the most difficult week in the British banking giant's history but for the urbane 60-year-old Barclays chief executive it must have seemed he had at least earned a few hours' respite from the reputational wrecking ball unleashed by the rate-fixing scandal.

At 7am that morning, the bank's chairman, Marcus Agius had fallen on his sword by resigning with the words "the buck stops with me". It was a move widely interpreted as an attempt to ensure that Mr Diamond stayed at the helm of the notoriously complex bank and its £1.5trn of assets.

Shortly after lunch, the CEO put the finishing touches to his plan to shore up his position by sending a 1,800-word letter to Barclays' staff in which he made clear that he was staying put to make sure the Libor manipulation debacle "cannot happen again".

With the sort of hand-on-heart emotion that is rarely displayed in the testosterone-fuelled world of high finance, Mr Diamond twice declared his "love" for Barclays. But within less than 24 hours, this billet-doux had turned into a professional adieu.

At some point between 8pm and a late-night phone call from a freshly-reinstated Mr Agius to the Chancellor, George Osborne, announcing that Mr Diamond was stepping down, events turned drastically against the American-born chief executive, whose personal fortune is estimated at £105m.

All of a sudden, the entrance to 1 Churchill Place – Barclays HQ in Canary Wharf – had been turned into a career-transforming revolving door, spitting out Mr Diamond and (although it would not be confirmed until yesterday afternoon) the chief operating officer, Jerry del Missier.

Remarkably, Mr Agius, having fulfilled his role as corporate fall guy on Monday, found himself travelling in the opposite direction and was restored back to his office on the 31st floor with the sort of title that summed up the crisis in the bank's highest echelons – full-time chairman (temporary).

Mr Agius underlined the personal nature of Mr Diamond's decision, telling Sky News the decision was made "after something just snapped last night". But in his resignation statement, issued at 7am yesterday, Mr Diamond hinted at what he saw as the reason why his position had become untenable. He said: "The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen. 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."

Sources close to Mr Diamond initially briefed that he had decided to go after he saw the reaction of shareholders and politicians to the carefully-choreographed departure of Mr Agius and continuing calls for his own resignation.

But by yesterday lunchtime it was increasingly clear that matters were more complicated than this and that the dethroning of Diamond may have been the direct result of a clash between Barclays and two of the highest financial instruments of the British state – the Bank of England (BoE) and City regulator, the Financial Services Authority (FSA).

At an unspecified time yesterday, Sir Mervyn King, the Governor of the BoE, phoned Mr Agius for what is likely to have been what diplomats refer to as a "frank exchange of views" about the suitability of Mr Diamond staying in post. A similar conversation is understood to have taken place between Barclays and the FSA.

When asked if the FSA would have subjected Mr Diamond to a "fit and proper person" test had he stayed in post, Andrew Bailey, the head of the FSA Prudential Business Unit, said yesterday: "The [Barclays] board had to decide who the best person was to lead cultural change. If the answer had come back that 'it's Bob Diamond', which it could have done, then yes, we would have had to have taken a view on that."

What precisely lay behind this Establishment pincer movement will depend on the accuracy of Barclays claims, encapsulated by the internal memo released yesterday of a conversation between Mr Diamond and the BoE deputy governor Paul Tucker, that the central bank was at the very least aware of Libor manipulation in 2008.

There was speculation yesterday that the attempt to implicate the BoE in tacit approval of the rate-fixing scam, first reported by the BBC's Robert Peston on Sunday, had crossed a line in an unwritten code of City conduct whose first clause was not to impugn the Old Lady of Threadneedle Street.

Lindsay Thomas, a former FSA director, said the BoE would have taken a particularly dim view of any attempt to drag it into the dock over rate fixing. She told BBC Radio 4:"I think the Governor would have called Barclays and made it plain that [the resignation of Mr Diamond] was what they expected to happen."

The full intricacies of what took place, including the identity of unnamed Whitehall figures who had expressed concern to Mr Tucker about Barclays inter-bank lending rate submissions at the height of the credit crunch, threaten to be the most damaging chapter of the scandal.

But in the meantime, it was clear as Mr Diamond made his way back to his Kensington townhouse yesterday that the most powerful regulators in Britain had formed the same view as Lord Mandelson once famously did, that the Barclays chief executive was the "unacceptable face of banking".

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Guru Careers: Software Tester / QA Engineer

£23 - 28k (DOE) + Benefits: Guru Careers: A Software Tester / QA Engineer is n...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Guru Careers: Graduate Editor / Editorial Assistant

£16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine