Barclays chairman Marcus Agius has become the first casualty of the rate-rigging scandal as he resigned and announced an internal review into the bank's "flawed" culture.
Mr Agius, 65, who was chairman for six years, said he was "truly sorry" for the affair, which has "dealt a devastating blow to Barclays' reputation".
Despite mounting calls for his departure, Barclays chief executive Bob Diamond showed no signs of stepping down as he pledged to fully implement the findings of an independently led audit into practices at the bank since the financial crisis.
Mr Agius's resignation comes after Barclays was fined £290 million by UK and US regulators for manipulating the Libor, the rate at which banks lend to each other. The Bank of England was also drawn into the affair after it emerged staff mistakenly thought they were instructed by the central bank to lie in their rate submissions. The Financial Services Authority's report said there had been a misunderstanding arising from a conversation between Bank Deputy Governor Paul Tucker, a favourite for the Governor role, and an unidentified senior Barclays manager on October 29 2008.
Mr Agius said: "This has been a period of unprecedented stress and turmoil for the banking industry in particular and for the wider world economy in general." He added: "Last week's events - evidencing as they do unacceptable standards of behaviour within the bank - have dealt a devastating blow to Barclays' reputation. As chairman, I am the ultimate guardian of the bank's reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside."
Mr Agius will remain in post until an "orderly succession is assured", while Barclays non-executive director Sir Michael Rake has been appointed deputy chairman.
Labour leader Ed Miliband said the resignation of Mr Agius was not enough, and repeated his call for Mr Diamond to step down. He said: "I think there needs to be a more general change of leadership including the chief executive, Bob Diamond. I do not think it is enough more generally because people just going, resigning, isn't really getting to the bottom of what happened, who is responsible and punishing those who did wrong. I want to see criminal sanctions against those who broke the law."
Mr Agius is due to face MPs on the Treasury Select Committee on Thursday - a hearing that is expected to go ahead irrespective of his decision to quit. Mr Diamond, who faces the committee on Wednesday, said Mr Agius's decision "deserves all of our respect". The American banker, who headed the bank's investment arm Barclays Capital when the rate-rigging occurred, added: "I welcome the board's undertaking of an independent, third-party audit of our business practices. I am committed to ensuring that the recommendations from this review are implemented in full, as part of a broader programme to continue to build a culture that all of those with a stake in Barclays can be proud of."
Labour is to table an amendment to the Financial Services Bill in the House of Lords today, calling for a full, independent and public inquiry to restore confidence in the proper functioning of the markets. The party hopes to raise the matter later in the week when a clause in the Bill relating to the new Financial Conduct Authority's responsibility to ensure the proper functioning of the markets is debated in committee. And a senior Labour source said they hope to force a full parliamentary debate and vote on their calls for an inquiry "at the earliest possible opportunity".
Mr Agius has also resigned from his role as chairman of the British Bankers' Association (BBA), the trade association said. A statement from the BBA said: "Marcus Agius has tendered his resignation as chairman of the British Bankers' Association. This is a matter for the board and a meeting will be held shortly. A further statement will be made in due course."