“Barclays today announces the resignation of Bob Diamond as chief executive and a director of Barclays with immediate effect,” the bank said in a statement issued to the London Stock Exchange.

Shares in Barclays were up 1.43 per cent today at 171.3 pence.

Marcus Agius, who has also announced his intention to resign as chairman, will lead the search for a new CEO, the statement said.

The search for a new CEO will examine both internal and external candidates.

“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. The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen,” Diamond, who joined Barclays 16 years ago, said in the statement.

“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. 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. I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question,” he said.

Diamond was referring to the UK House of Commons Treasury Select Committee panel of lawmakers, which is due to question him about revelations that Barclays manipulated the London Interbank Offered Rate – and its Euro version. The Financial Services Authority, the UK regulator, along with US authorities, have slapped penalties totalling £290 million on the bank. It is understood that other financial institutions,  including large UK banks such as Royal Bank of Scotland and Lloyds Banking Group, are being investigated.

The resignation is arguably the most high-profile departure of a CEO since Oswald Grubel stepped down from UBS last autumn in the wake of revelations that the Swiss firm had suffered $2.3 billion in losses from unauthorised trades.