Diamond ‘hounded out by MPs’

It is a soap opera like no other I can remember in my 30 years (well 29 years to be precise) of reporting on the City.

On Friday night Barclays board, in an emergency meeting, decided that both Bob Diamond and Marcus Agius should tough it out: they did not need to quit their respective roles of chief executive and chairman.

Then on Saturday night, Marcus Agius took a personal decision to become the lightning rod for the criticism, to protect Barclays and Mr Diamond, so he decided to resign - which he told colleagues about on Sunday morning and was confirmed yesterday.

But the lightning continued to strike Mr Diamond. And so last night, after long discussion with colleagues, Mr Diamond decided go.

Why?

Well one Barclays source tells me he felt hounded out by MPs. He felt the government's planned parliamentary enquiry about standards in banking would be all about him, as would a longer judicial investigation demanded by Labour.

"Bob felt all his time would be spent preparing evidence, submitting testimony, thinking about the media implications, and so on" said this source. "He would have no time to run or fix the bank".

So he has quit, with immediate effect, to save the bank he loves, as it were.

And, in an extraordinary twist, Mr Agius is temporarily becoming more powerful at Barclays. He is becoming the group's executive chairman, pending the recruitment of a new chief executive.

This brings risks for Barclays. It is famously one of the most complex and large banks in the world. And Mr Agius has never had day-to-day operational responsibility for any bank remotely in its league (he was a corporate-advising investment banker at the London arm of Lazard for most of his career).

In fact Barclays sheer size and complexity was one reason why shareholders were not baying for Mr Diamond's immediate departure. They took the view that Mr Diamond, who was credited with creating the sprawling modern form of Barclays - global, huge on Wall Street - was probably the safest pair of hands to steer it away from accidents, in the absence of an obvious successor.

And, as one influential investor put it to me, this is not an easy time to be running any British bank, with the eurozone lurching from crisis to crisis and the UK in recession.

But if Mr Diamond felt that it was politicians who pushed him towards the exit, there was also a nudge from investors.

How so? Well the price they were demanding for him to stay and clean up the bank was that he should surrender some of the vast rewards he had accumulated from a culture at the bank now acknowledged to be flawed - and which investors hold him partly responsible for.

They wanted either a claw back of past bonuses and spoils from long-term incentive schemes, or the surrender of what he could earn from long term incentive plans that haven't yet vested.

If he simply gave up the maximum he could be paid from past incentive schemes, this would deprive him of up to £16m, according to the consultancy Manifest.

Or to put it another way, running Barclays was very unlikely to be anywhere near as remunerative for Mr Diamond as it has been.

Who knows whether this influenced his decision to quit?

Tomorrow Mr Diamond has the opportunity to explain himself to a subset of those very MPs who have made life so horrid for him, when he gives evidence to the Treasury Select Committee.

As you know, I am particularly interested to hear what he will say about a secret conversation he held in the autumn of 2008 with Paul Tucker, deputy governor of the Bank of England - and whether he felt Mr Tucker was in anyway encouraging Barclays to understate its borrowing costs.