Diamond had faced pressure to leave his position after the $2.3 trillion bank agreed last week to pay a $453 million settlement in the scandal.
A joint British and U.S. investigation revealed that Barclays traders purposely manipulated the London interbank offered rate, known as Libor, for their own financial benefit.
The Libor rate is used as a reference for many investment and retail banking rates, including interest rate swaps, variable rate mortgages and securities like the NCUA’s Guaranteed Notes, which were resecuritized from corporate credit union legacy assets.
Multiple reports also say that Jerry del Missier, who had recently been promoted from co-head of the bank’s investment banking division to chief operating officer, will also resign as a result of public and political pressure stemming from the Libor scheme.
Barclays Chairman Marcus Agius will also resign, but he will remain at the bank in the CEO seat while Barclays finds a replacement for Diamond.
“The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen,” Diamond said in a statement Tuesday.
“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.”
Barclays was the first to settle with authorities over the Libor scandal. Other banks reportedly under investigation include Citigroup, Deutsche Bank, HSBC Holdings, J.P. Morgan Chase and the Royal Bank of Scotland.