Bob Diamond makes surprise Wall Street return

Diamond, who left the lender following the Libor scandal, has acquired a stake in South Street Securities

The former chief executive of Barclays has made a surprise Wall Street comeback just three years after he was ousted from the British bank.

Bob Diamond, who left the lender following the Libor scandal, has acquired a stake in South Street Securities, a New York trading firm specialising in the repo market.

South Street uses investment houses to raise short-term funds using bonds as collateral. It is led by chief executive James Tabacchi, an ex-Citicorp executive who founded it in 2001.

Mr Diamond is expected to use the investment as a precedent for large investments in trading businesses as global banks face pressure from investors to sell unprofitable assets amid tighter regulation, The Sunday Times reported.

The former bond trader was credited with turning Barclays into a global leader in investment banking and led the acquisition of the US arm of collapsed Wall Street behemoth Lehman Brothers in 2008. But the 64-year-old American was forced out after its role in the rigging of the Libor interest rate benchmark emerged.

Mr Diamond co-founded the Atlas Mara fund, which invests in African financial services businesses, in 2013 but has faced questions over pay awarded to its managers this year. He is also using his Atlas Merchant Capital fund to attempt to buy up banking assets.