Mervyn King's management coup puts Barclays at risk "In addition, Moody's believes that the bank could be challenged to replace the three senior staff and in particular find a new chief executive who not only has a sufficient understanding of the investment banking business to run Barclays, but also has the credibility and ability to swiftly address the weaknesses that the Libor incident revealed and stakeholders" perceptions of the investment bank." In Government, much is being made of the Bank Governor's "eyebrows" - the legend being that he need only raise one to decide the fate of a bank or individual. Within Barclays, though, there are protests that the regulators never properly communicated that Mr Diamond should go. Both Lord Turner, chairman of the Financial Services Authority, and Andrew Bailey, chief executive elect of the Prudential Regulatory Authority, are believed to have spoken to Mr Agius in the days after the scandal broke. However, neither man said that Mr Diamond had to go. The message was that they needed to fix the cultural problem with the bank and to be seen to be responding to the public and political outrage. Over the weekend, after speaking with regulators at the FSA, Mr Agius and the board decided he would announce his resignation and announce an independent third-party review to overhaul the bank's culture, revealing the response on Monday. "This was a classic City route," one senior bank director said. If there is widespread loss of confidence, then the chairman takes responsibility for that. A new chairman comes in and they then remove the chief executive. Then you have an orderly management succession. Axing the chief executive is high risk. This has been an absolute French farce of a process. Sir Mervyn King, the Bank's Governor, decided that the traditional City route was not good enough, however, and instructed Mr Agius to demand Mr Diamond's resignation. Mr del Missier also appears to have been judged unsuitable for high office. One of the key problems seems to have been the collapse in relations between the FSA and Barclays. Earlier this year, regulators were heard privately discussing whether Mr Diamond was a "fit and proper" person to run the bank and, in February, Mr Bailey and FSA chief executive Hector Sants expressed concerns to the board about cultural failings at the bank. However, Mr Diamond never felt this was directed personally. He admitted that "they felt there were some cultural issues" but said they told him the FSA was "pleased with the tone from the top." Like Mr Diamond, Mr Agius political antennae did not seem to be working properly either. That shortcoming had been displayed over Mr Diamond's pay earlier in the year. Shareholders thought they had made it clear that they disapproved of the chief executive's package, but Mr Agius failed to pick up the message. As a result, investors lost confidence in him and asked for his departure. He was already preparing to step down before his resignation statement on Monday. Another problem was the confused messaging coming out of the FSA. The FSA delivered the settlement documents for Libor rigging, including the £290m fine, to Barclays on June 20 - a week before they were made public. Two days later, Mr del Missier was promoted from head of the investment bank to chief operating officer. Mr del Missier's appointment was cleared by the FSA even though the regulator's investigation found that he had personally instructed juniors to rig Libor. As a result of the finding, Barclays asked whether it needed to take action against him and the FSA said that none was required. On Tuesday, the FSA and the Bank switched stance - suggesting Mr del Missier had to leave as well as Mr Diamond. In the event, Sir Mervyn rode roughshod over the board, and possibly even his regulatory colleagues. Doing so in the middle of a global debt crisis was a risky strategy but, according to the senior bank director, showed the depth of anti-Diamond feeling at the Bank. "Presumably they thought that it was riskier to keep him than to lose him," the senior bank director said. It is widely known that neither Sir Mervyn nor Lord Turner at the FSA trusted Mr Diamond, who was renowned for taking large risks and pushing the rules to the limit. After questions about tax avoidance, excessive pay, mis-selling to small businesses, the Libor scandal was the last straw. Sir Mervyn decided the regulators would no longer support him. "He was sent off for repetitive fouling, not going in for a two-footed tackle on Libor," another rival banker said. Barclays, though, says the management crisis could have been avoided had regulators made their position clearer early on. An agreement could have been struck, they suggest, that would have seen Mr Diamond announce his departure but remain until a successor was found - steadying the ship. "The hints shouldn't be in the press, the regulators should pick up the phone and tell the chairman," one person close to proceedings said. That's how the eyebrows work.