Last week, U.S. and British agencies imposed the fines on Barclays for submitting false data on interbank borrowing rates between 2005 and 2009. The bank's executives have been under fire since then and the calls are growing for chief executive Bob Diamond to quit too.
"As chairman, I am the ultimate guardian of the bank's reputation," said Marcus Agius, who had led the board since 2007. "Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside."
Barclays shares were little changed at 162.05 pence in early trading in London. Its share price has fallen sharply since the imposition of the fine.
In a further attempt to soothe critics, Agius said Michael Rake, a senior independent director of the bank, has been appointed to lead an in-house review of all past practices and to publish a report of its findings and develop a new, mandatory code of conduct for everyone at Barclays.
Barclays Chief Executive Bob Diamond, who is also under great pressure because of the scandal, said Agius "has been a thoughtful and supportive colleague to me in all of my roles — especially since I became chief executive last year — and for this I will always be grateful."
Agius will remain as chairman until a successor is appointed, the bank said.
His departure may leave Diamond more exposed. Diamond is likely to face a grilling Wednesday when he appears before a group of lawmakers. His critics say he is culpable because he set the aggressive style at Barclays Capital, the investment banking operation he previously led.
Ed Miliband, leader of the opposition Labour Party, called for Diamond to go.
"I don't think he can carry Barclays forward ... because I think that he was there, he was actually in charge of the part of Barclays where some of these scandals took place some years back," Miliband said in an ITV interview.
Barclays admitted that it had submitted lower than actual figures on its interbank borrowing during the credit crisis in 2007 and 2008.
"Even taking account of the abnormal market conditions at the height of the financial crisis, and that the motivation was to protect the bank, I accept that the decision to lower submissions was wrong," Diamond said last week.
In other cases, regulators found that individual traders encouraged colleagues to file false reports to protect their own dealings.
The rate data, along with submissions from other banks, are used to set the London interbank offered rate, a key index for financial dealings.
A number of other banks including Royal Bank of Scotland, HSBC and Citigroup are also being investigated for possible manipulation of the rate.
Agius, 65, joined the Barclays board in 2006 and became chairman in January 2007.
His banking career began when he joined Lazard, a major asset management and advisory company, in 1972. He served as chairman of Lazard London and then as deputy chairman of the company's worldwide operations.
"If anything, by falling on his own sword, Mr. Agius leaves the board temporarily weakened at a time when a strong leader is required to make tough decisions," said Gary Greenwood, analyst at Shore Capital.
"While the departure of Mr. Agius will grab the headlines today, the bigger issue remains whether Mr. Diamond should also remain in his role," Greenwood added. "From a pure operational perspective it is not clear to us that his removal would be beneficial, but we question whether the negative sentiment towards the company, of which he is the focus, can be repaired while he remains at the helm."