Barclays' bloodletting: Another top executive quits as spotlight falls on size of Bob Diamond payoff

Barclays' bloodletting: Another top executive quits as spotlight falls on size of Bob Diamond payoff

• Chief operating officer Jerry del Missier follows Diamond and Agius through exit door
• Bank of England, ministers and FSA on alert ahead of explosive committee appearance

By Tanya Jefferies and Ed Monk

PUBLISHED: 01:52 EST, 3 July 2012 | UPDATED: 10:16 EST, 3 July 2012

The bloodletting on the Barclays board took another big scalp today after chief operating officer Jerry del Missier followed chief executive Bob Diamond out of the door in the wake of the rate-rigging scandal which blew up last week.

Mr del Missier had only been in the role since last month but he worked with Mr Diamond at the bank's investment arm Barclays Capital between 2005 and 2008.

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 attempting to fix the key interbank lending rate.

Mr Diamond quit this morning and the outgoing chairman Marcus Agius, who announced his resignation yesterday, will lead the search for a new chief executive.

Exit door: Bob Diamond has quit Barclays after days of pressure following revelations that Barclays traders conspired to falsify Libor submission.

Attention has turned to the amount the American, who earned £18million last year and is worth an estimated £105million, might receive as a severance package. Reports suggest Diamond will walk away with 13.2million shares he has accrued over 15 years, worth £22.9million.

In a conference call to journalists this afternoon Barclays Chairman Marcus Agius said he did not recognise the £22.9million figure, but added that the board had not had time to discuss details of Mr Diamond's pay, or if there was a case for clawing back any of the invested shares that have previously been awarded to him.

Diamond's departure follows a tidal wave of criticism from politicians and industry critics who demanded that he take responsibility for Barclays' attempts to manipulate Libor, the interest rate at the heart of the scandal.

The controversial bank boss is expected to make explosive revelations when he faces a grilling by MPs at the Treasury select committee tomorrow.

Mr Diamond's departure from Barclays could free him up to fight back when he appears before MPs tomorrow. The Bank of England, regulators at the Financial Services Authority and ministers past and present could face tough questions about what they knew of Libor manipulation and when.

The resignation also heaps pressure onto the heads of other banks, many of whom also face investigations into Libor rigging.

PRESSURE ON BOARD TO CLAW BACK BOB'S SHARES

The board of Barclays will face pressure to curb Bob Diamond's exit pay deal which could run to around £20million despite him having to resign to avoid damaging the bank's reputation.

Mr Diamond seems likely to pick up one year of salary worth £1.35million, as well as £2.3million of 'capital contingent awards' from the Bank. But there is less certainty around the huge potential share awards built up by Mr Diamond.

These shares were issued in previous years and cannot be vested for an agreed period, with the potential for awards to be clawed back in the event conditions are not met. Such awards have been structured in this way since the financial crisis to incentivise better behaviour and less short-termism among executives.

It will now fall on Barclays b oard to decide if it is appropriate to claw back all or some of the  shares that are worth in the region of £20million based on current prices.

The bank stressed this morning that Mr Diamond enjoyed the full support of the board at the time of his resignation - despite Mr Diamond's own analysis that he could not continue in the role because pressure had reached 'a level that risks damaging the franchise'.

Pay awards from previous years were issued on the basis of the bank's profitability. Board members may decide against clawing back shares on the basis that Libor manipulation did not impact upon the profitability.

Mr Diamond, who earned £18million last year, said this morning: 'The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen.'

The American added: '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 shares fell around 3 per cent following the announcement, but have since recovered and were trading up 3 per cent at 173p by mid-morning.

Mr Diamond's exit comes after Barclays was fined £290million by UK and US regulators for manipulating the Libor, the rate at which banks lend to each other.

It is unclear if Mr Diamond will receive a payoff from Barclays as part of his departure. A Barclays spokesman said this morning that the exit terms are still the subject of discussions by the bank's leadership.

Louise Rouse, director of engagement at shareholder campaign group FairPensions, said that allowing Mr Diamond to leave with a bumper pay deal would be the 'ultimate reward for failure'.

She said: 'There was outrage when RBS cited contr actual reasons for allowing Fred Goodwin to leave with a huge pay-off. The changes brought in since then were supposed to stop chief executives leaving in a storm with a huge pay off.

'If Bob Diamond pockets millions in shares that could be clawed back, you have to question whether any of the changes to remuneration from the last few years have had any effect at all.'

Chairman Marcus Agius announced his intention to resign over the affair yesterday in a move widely seen as attempting to divert attention away from Mr Diamond.

He will now stay on temporarily to lead the search for a new chief executive, Barclays said.

Mr Diamond had been defiant since the scandal over Libor broke, insisting that he would not resign. But it appears the prospect of a hostile confrontation with MPs this week made his position untenable.

In his statement today Mr Diamond said: 'I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question.'

A Barclays spokesman  added that Mr Diamond had enjoyed the full support of the board at the time of the resignation, and that the decision to leave was Mr Diamond's alone.

Chancellor of the Exchequer George Osborne said Mr Diamond's resignation was 'the right decision for Barclays' and the 'right decision for the country'.

He denied the Goverment had sought to force the removal of Barclays chief executive, adding: 'I was very clear that it was not the job of the Chancellor of the Exchequer or the Prime Minister or anyone else in the Government to make a decision about who ran, in effect, a private company, Barclays.'

Reports yesterday suggested Mr Diamond will give details of a conversation between a senior Barclays manager - possibly Diamond himself - and the Bank of England's current deputy governor, Paul Tucker, from 2008.

It is alleged that, following the conversation, Barclays traders were under the impression that the Bank of England was happy for them to fix Libor. The Bank of England has denied it had any knowledge of manipulation of Libor.

DIAMOND NOT FOREVER: BOB'S STORMY REIGN AT AN END

Sports fan: Bob Diamond has risen through the ranks at Barclays to become one of the world's best paid bankers.

As one of the world's richest and most successful bankers, former Barclays boss Bob Diamond has never strayed too far from the public gaze.

The American was once described by Lord Mandelson as the 'unacceptable face of banking' due to his lavish pay deals and has amassed an estimated fortune of around £95million.

Mr Diamond, who was appointed chief executive on January 1 last year, picked up a salary of £1.3million and was reportedly in line to receive £11million in payouts this year before waiving his annual bonus in the wake of the rate-rigging scandal.

Within days of starting the top job at Barclays, and having passed up his bonus handout in 2009 and 2010, he angered some MPs last year by saying the time for 'remorse and apology' needed to be over as banks looked to support Britain's recovery.

Mr Diamond's highest-profile deal was Barclays' controversial acquisition of the brokerage arm of US bank Lehman Brothers for 1 .7billion US dollars (£1.1billion) after it collapsed in 2008.

In June 2010, Mr Diamond faced a federal court hearing in Manhattan, which was looking into allegations that Barclays duped Lehman Brothers out of billions of dollars during the deal.

It is largely down to Mr Diamond's Barclays Capital division that the UK bank avoided state assistance during the credit crunch, although market turmoil has dented his former division's profits in recent months.

Prior to joining Barclays in 1996, Mr Diamond held senior leadership roles at Credit Suisse First Boston in Tokyo and New York, and at Morgan Stanley International.

Mr Diamond, now a UK citizen, grew up in Massachusetts as one of nine children of schoolteacher parents.

He started his working life as an academic, lecturing at the University of Connecticut's Business School in 1976. The married father-of-three is known for his love of sport. He supports Chelsea but r emains a devoted fan of American football team the New England Patriots.

He sits on the board of Old Vic Productions, alongside Dame Judi Dench, and is a trustee of the Mayor's Fund for London and a member of the British-American Business Council.

He still retains his links to the US, where he is chairman of the board of trustees at his old college and has also set up the Diamond Family Foundation which has given millions of dollars to education projects.

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