Barclays Bank PLC - A Shameful Scandal

[CNN.com] -- The chief executive of Barclays, one of the world's largest banks, is resigning in the wake of a scandal, Barclays announced Tuesday.

Bob Diamond's resignation is effective immediately, the bank said.

Barclays' reputation has been hammered by a scandal around the rates at which banks lend each other money, known as LIBOR (London interbank Offered Rate).

The bank was fined $450 million last week by British and American regulators for rate-fixing during the height of the global financial crisis, and is one of a host of banks facing lawsuits in New York over the scandal.

British Chancellor George Osborne welcomed Diamond's resignation, calling it the right decision for the bank and the country. "We need our banks to be focused on lending to the economy, not on the scandals of the past, and I hope this will be the first step towards a new culture of responsibility in British banking which is what the British people want to see," said Osborne, effectively the country's finance minister.

British Prime Minister David Cameron said Monday that a full parliamentary inquiry would be held into the Libor rate-fixing scandal and standards in the banking industry, with witnesses called to give evidence under oath.

The chairman of the Financial Services Authority, Britain's banking regulator, last month blasted the "cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits." FSA chairman Adair Turner said the scandal "has caused a huge blow to the reputation of the banking industry" and "has justifiably shocked and angered people."

Diamond is due to testify before the British parliament's Treasury Committee on Wednesday 4 July 2012. The resignation of the American-born Diamond comes a day after Barclays chairman Marcus Agius announced his own resignation over the lending-rate scandal. But Agius reversed his decision on Tuesday and will lead the search for a new chief executive, Barclays said.

Barclay's is the 15th largest bank in the world, according to an annual list of the world's top 1000 banks released by The Banker magazine on Monday.

It is Britain's second most profitable bank, and the 18th most profitable in the world, the trade magazine said. Diamond said he always aimed "to do what I believed to be in the best interests of Barclays.

In today's Cape Times, the South African Finance Minister, Pravin Gordhan is quoted as saying "Banks are greedy monsters".

Silke Financial Services is watching the situation carefully.