BARCLAYS chief executive Bob Diamond resigned with immediate effect today in the wake of the rate-rigging scandal.
The American banker, who has faced mounting calls to step down, said: "The external pressure placed on Barclays has reached a level that risks damaging the franchise."
He 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."
The move 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.
Chairman Marcus Agius, who announced his intention to resign over the affair yesterday, will lead the search for a new chief executive immediately, Barclays said.
Mr Diamond, who was once dubbed the ``unacceptable face of banking'' by Lord Mandelson, showed no sign of stepping down yesterday as he pledged to see an internal review into Barclays' practices through to implementation.
The 60-year-old, who joined the bank 16 years ago, said: "My motivation has always been to do what I believed to be in the best interests of Barclays. No decision over that period was as hard as the one that I make now to stand down as chief executive."
He went on: "I know that each and every one of the people at Barclays works hard every day to serve our customers and clients. That is how we support economic growth and the communities in which we live and work."
Mr Diamond confirmed he would still appear before the Treasury Select Committee tomorrow to answer questions over the rate-fixing allegations which ultimately led to the Government yesterday launching a parliamentary probe into banking culture.
He added: "I leave behind an extraordinarily talented management team that I know is well placed to help the business emerge from this difficult period as one of the leaders in the global banking industry."
Mr Agius, who will become full-time chairman until he steps down at an unspecified date, said: ``Bob Diamond has made an enormous contribution to Barclays over the last 16 years of distinguished service to the group, building Barclays Investment Bank into one of the leading global investment banks in the world. As chief executive he has led the bank superbly.''
As he resigned yesterday, Mr Agius announced an internal review into the bank’s "flawed" practices.
Mr Diamond, who has courted controversy for his hefty pay packages, which in 2011 alone totalled close to £18 million, told employees in a letter yesterday: "I am committed to ensuring the recommendations of this review are implemented in full."