Diamond crowned as Barclays’ new chief

CITY insiders voiced concern over the future of Barclays’ retail banking operation yesterday after the group confirmed Bob Diamond would replace John Varley as chief executive.

Diamond, who has won renown aggressively building the Barclays Capital investment bank, will take over from Varley next March. Varley will stay on for six months as an adviser to Barclays on regulatory issues as Sir John Vickers delivers his verdict on whether large institutions should be split up to the chancellor.

The outgoing boss has also been tipped for a position in government.

Diamond will enjoy a £11.5m annual pay and bonus deal, significantly more modest than the total haul of £63m he took home last year. Chairman Marcus Agius defended the package as having been “benchmarked” against Diamond’s peers.

But analysts were more worried about the implications of the appointment for Barclays’ plan to cut its reliance on BarCap’s revenues. Last year the investment banking arm delivered nearly half the group’s income, a ratio Varley said would be reduced to a third over time.

Evolution Securities wrote: “All in all we feel the management changes at Barclays are likely to make even more pronounced what we consider to be its main weakness: too much investment banking, too little retail.”

Merrill Lynch said there “will be question marks over Bob Diamond’s retail commitment” but was pleased to see continuity within Barclays’ senior management line-up.

Diamond was at pains to emphasise his commitment to Barclays’ model of combined high street and capital markets banking. He pledged a “seamless” transition from Varley. Observers said they doubted his presence would increase the likelihood of Barclays quitting the UK.