Barclays chairman Marcus Agius resigned on Monday, paying the price for the "devastating" damage to the bank caused by the rigging of key global interest rates which has sullied London's image as a financial centre.
The beleaguered bank announced his departure, and promised an independent audit, shortly before the markets opened amid questions about the future of its chief executive Bob Diamond and generally about morality in the City.
The manipulation of interest rates, which may turn out to implicate some other international banks, concerned the Libor and Euribor rates which play a key role on global markets, affecting banks, businesses and individuals.
Barclays said that Agius, who has chaired the bank for six years, would remain in his post until a successor was found.
But markets were also focused on whether Diamond, a high-profile and highly paid banker, would keep his job amid widespread calls for him to go.
Markets were also wondering whether the latest banking scandal would result in a radical shake-up of the way in which business is conducted across London's financial sector, commonly known as the City, amid pressure from high up the political ladder.
"I am truly sorry that our customers, clients, employees and shareholders have been let down," Agius said in a company statement, less than a week after the bank was fined by British and US regulators for alleged rigging of inter-bank rates.
Agius said: "Last week's events -- evidencing as they do unacceptable standards of behaviour within the bank -- have dealt a devastating blow to Barclays' reputation.
"As chairman, I am the ultimate guardian of the bank's reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside," he said in the statement.
Barclays added that it would launch an independent audit that would "undertake a root and branch review of all of the past practices that have been revealed as flawed since the credit crisis started" about five years ago.
The bank insisted that it would establish "a zero tolerance policy for any actions that harm the reputation of the bank."
Britain's Business Secretary Vince Cable on Sunday backed calls for a criminal investigation into bankers involved in the scandal.
That was after Prime Minister David Cameron said he intended to bring Diamond and others at the bank to account.
Diamond, who was in charge of Barclays' investment arm at the time of the suspected manipulation, was to face questions from British lawmakers on Wednesday.
Pressure on Barclays has risen after British and US authorities last week together fined the bank £290 million ($455 million, 360 million euros) amid international probes into several lenders over alleged rigging of inter-bank rates.
Traders at the bank are suspected of manipulating the Libor rate in order to skew the markets in their favour.
Barclays is the first major financial institution to settle following investigations on both sides of the Atlantic.
On Sunday it emerged that bailed-out The Royal Bank of Scotland (RBS) had sacked four traders over their alleged involvement in the affair, raising suspicions that the practice was widespread.
Meanwhile the true cost of the scandal risks ballooning for Barclays.
"Civil suits represent a significant uncertainty" for Barclays, Deutsche Bank analyst Jason Napier said on Monday.
"We see challenges for plaintiffs to show that artificially suppressed or raised Libor estimates from Barclays... shifted Libor on any given day and that financial loss followed as a consequence," he said in a note.
In Monday morning trade following the announcement by Barclays, the bank's share price surged 5.22 percent to 171.35 pence on London's benchmark FTSE 100 index, which was up 0.84 percent.
Monday's gains helped the bank's share price to recover from last week's heavy losses that wiped billions of pounds from Barclays' market value.
"Talk of Barclays and the Libor scandal remains the focus of the London market this morning, with the resignation of Barclays chairman, Marcus Agius, compounding fears that the City is facing a significant shakeup in light of last week's events," said Spreadex trader David White.
Bank of England head Mervyn King on Friday said Britain's banks needed a "real change in culture" following a series of scandals that rocked the country's financial sector last week.
As well as fining Baclays over Libor, British regulator the Financial Services Authority last week said it had reached agreement with the bank and its rivals HSBC, Lloyds and RBS to compensate clients for mis-selling interest rate hedging products.
Also last week, an IT meltdown at RBS left millions of customers unable to complete transactions.