Barclays picks American to head British bank

7th September 2010, Comments 0 comments

British bank Barclays said on Tuesday it had chosen American Bob Diamond, head of its highly successful investment banking unit, to become chief executive in place of incumbent John Varley.

Barclays, the third-biggest British bank, said that British national Varley would step down at the end of March, 2011 after more than six years at the helm.

"John Varley has made an extraordinary contribution to Barclays during his long service with the group and the board is grateful to him for the tremendous progress Barclays has made during his tenure as group chief executive," Barclays chairman Marcus Agius said in a statement.

"I am delighted that Bob Diamond will be his successor. He is superbly qualified, with more than 30 years' experience in the banking sector, the last 14 of which have been with Barclays," he added.

Diamond, 59, is one of the world's highest paid bankers thanks to his success in running Barclays Capital, which in recent years has provided the bulk of the bank's profits.

He was also behind Barclays' purchase of Lehman Brothers' US operations following the investment bank's collapse in 2008.

"I am honoured by the board's confidence in me and greatly motivated by the challenge of leading Barclays during the critical period ahead," Diamond said, in reference to the ongoing fragile state of the global financial sector.

As chief executive, Diamond will receive an annual salary of 1.35 million pounds (1.62 million euros, 2.08 million dollars) but could earn millions more in bonuses, Barclays said.

He has an estimated fortune of about 100 million pounds, thanks to massive bonuses earned while heading Barclays Capital.

Analysts said that further high pay for Diamond was unlikely to go down well with Britain's new coalition government, which has been highly critical of bankers receiving large bonuses so soon after the financial crisis.

"In times of austerity, industry compensation continues to sit uncomfortably with politicians and the electorate, while questions over broader European banking strength have resurfaced," said Keith Bowman, an analyst at Hargreaves Lansdown Stockbrokers.

The Conservative-Liberal Democrat partnership is also looking into whether Britain's big banks should separate their retail and investment units in the wake of the financial crisis.

New York-based Diamond, who will relocate to London, will become deputy chief executive on October 1 ahead of replacing 54-year-old Varley, who managed to steer Barclays through the financial crisis without the aid of government support.

Varley, who reportedly planned to retire at 55, said it had been a "great privilege" to serve as chief executive.

Separately, it is expected to be announced on Tuesday that Stephen Green will leave his post as chairman of banking titan HSBC to become the trade minister in Britain's new coalition government, media reported.

The price of shares in Barclays fell by 2.59 percent to 314.50 pence on London's benchmark FTSE 100 index, which was down 0.71 percent. HSBC was down 0.23 percent.

"The appointment of Mr Diamond comes as no surprise," said analyst Bowman.

"His leadership in acquiring Lehman Brothers' assets at the height of the global banking crisis was both brave and, with hindsight, positive, with the strengthened investment bank leading the group's subsequent recovery."

© 2010 AFP

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