Barclays will today name investment banking president Bob Diamond as successor to chief executive John Varley in a surprise shake-up at the top of the British bank.
Diamond, who is credited with propelling Barclays Capital into the premier league of Wall Street players, is expected to take the reins next year around the time of the group’s annual general meeting in April. He will run Barclays along similar lines and will continue to defend the merits of universal banking in the face of calls from politicians for giant institutions to be broken up.
When he became chief executive in 2004, Varley told the board he would retire at 55. Having reached that age this year he has decided to step down to concentrate on other projects. Varley will continue to sit on the board of drugs maker AstraZeneca as a non-executive director and will devote more time to his charitable activities, which include chairing the Business Action on Homelessness campaign and running the Employers’ Forum on Disability.
Diamond and Varley have developed a strong rapport over the past seven years. Diamond will be seen as the natural choice to step into the breach despite his lack of experience in the retail lending arena.
The 59-year-old American joined the company from Credit Suisse in 1996 and has enjoyed increasing freedom at the helm of BarCap. His greatest coup to date, the purchase of the US brokerage arm of Lehman Brothers at a knock-down price in the middle of the financial crisis of 2008, gave Barclays a foothold from which to compete against the likes of JPMorgan and Goldman Sachs.
However, some UK shareholders will be concerned by Diamond’s more brash style. While Varley won popularity in the City with his quintessentially English manner, Diamond’s overt association with a culture of high remuneration has made him a target for politicians. Before the general election earlier this year, then-business secretary Peter Mandelson dubbed him “the unacceptable face of banking” after taking home a reported £63m pay cheque in 2009.
Diamond will take control at a crucial time for Barclays. Internally, he faces the challenge of weaning the group off its dependence on BarCap’s volatile revenue streams. On a broader level he faces myriad regulatory issues including the incoming UK levy on balance sheets and the possibility of a Glass-Steagall separation, which executives have hinted could force Barclays to quit the UK.