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Osborne Hails Diamond Departure With Pledge to Fix Banks

U.K. Chancellor of the Exchequer George Osborne said Robert Diamond’s move to quit as chief executive officer of Barclays Plc (BARC) was “the right decision.”

Diamond will step down with immediate effect, the London- based bank said in a statement today, succumbing to political pressure to go after the lender admitted to rigging global interest rates.

“It’s the right decision for Barclays, it’s the right decision for the country; we need Barclays to be focused on lending,” Osborne told BBC Radio 4’s “Today” program. “I hope it’s the first step towards a new culture of responsibility in British banking.”

Diamond is the latest British banker to bow to political pressure. In January, Royal Bank of Scotland Group Plc Chief Executive Officer Stephen Hester decided to waive his bonus after the opposition Labour Party threatened to call a parliamentary vote on it.

While David Cameron’s government stopped short of explicitly telling Diamond to go, the prime minister last week said he wanted accountability “all the way to the top” of the bank. “I don’t think it is for prime ministers to hire and fire bank chiefs,” he told lawmakers yesterday. Labour leader Ed Miliband had been clearer. After speaking to Diamond last week, he decided he had to go and called publicly for his resignation.

Need for ‘Leadership’

Osborne said the bank’s chairman, Marcus Agius, advised him of the decision last night. The chancellor said staff working at the bank “want to make sure that there is leadership there” and that the public, “who depend on the strong economy,” need “a Barclays Bank that is well-led, that is strong and is contributing to the economy.”

Agius, who said yesterday he would step down, will become full-time chairman and lead the search for a new CEO.

Barclays was hit by a record 290 million-pound ($455 million) fine last week for rigging the benchmark London interbank offered rate. Diamond had yesterday defied pressure to quit, pledging to implement the findings of a review into how the bank sets the rate.

Diamond will appear before Parliament’s Treasury Committee to answer questions about the affair tomorrow. Agius is due the following day. Labour’s John Mann, a member of the committee, told Sky News television that Diamond should hand back his bonuses, and added that he’d be asking which other banks were implicated in the scandal.

“I expect him to point the finger at everyone other than Barclays,” Mann said. “What other banks were participating in the same activities as Barclays? I suspect he’ll know.”

Osborne again rejected calls from Labour for a judicial inquiry into wrongdoing at banks. Finance “is an incredibly important industry,” he said. “It’s Britain’s largest private- sector employer. What we don’t need is its reputation tarnished, navel-gazing over these scandals. We know what went wrong, now we’ve got to fix it.”

To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net; Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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