Diamond's patience pays off with top post at Barclays
BOB Diamond, the architect of Barclays investment banking expansion, has been appointed chief executive officer and has pledged to boost the bank's consumer unit.
Mr Diamond (59) will become deputy CEO next month before John Varley (54) steps down at the end of March, the lender said in a statement yesterday. He will move to London from New York and receive as much as £11.48m (€13.8m) in salary and bonuses as CEO.
Chairman Marcus Agius defended the bank's universal model, where it acts as both a consumer and an investment bank, as a UK government commission considers forcing lenders to separate the businesses.
Barclays, the UK's third-biggest bank, is trying to cut the proportion of pretax profit generated by its investment bank to a third, down from two-thirds in the first half of this year.
"There's absolutely no space between John, Marcus and I on the strategic direction of Barclays," Mr Diamond told reporters. "There's no change in strategy here."
Barclays fell 2.7pc to 314p in London, as banking stocks slipped on lingering concern that the sovereign-debt crisis will hold back the global recovery. Barclays recorded the biggest decline in the five-member FTSE 350 Index of UK banks.
"The initial reaction to this is likely to be negative because of Mr Diamond's focus on the investment bank, but it shouldn't be," said Simon Maughan, an analyst at MF Global in London. "Barclays has been 70pc an investment bank for ages. Barclays shouldn't be ashamed of being a very successful investment bank."
Jerry del Missier and Rich Ricci will become co-CEOs of the investment banking unit that Mr Diamond has built up since he joined in 1996. Anthony Jenkins oversees Barclays' retail bank.
Massachusetts-born Mr Diamond led Barclays' 2008 purchase of Lehman Brothers' US operations. He has since embarked on an expansion in Asia, hiring at least eight managing directors in Hong Kong since March from rivals including Goldman Sachs and Morgan Stanley. The unit's revenue was £11.6bn (€13.9bn) last year, up from £5.2bn (€6.3bn) in 2008.
He also led the talks last year to sell Barclays Global Investors unit to BlackRock for $15.2bn (€11.9bn). Mr Diamond received a £26.8m (€32.3m) gain on the sale of his shares in BGI, the bank said in March.
"He's been the de facto head of Barclays for many years," said Peter Swan, professor of finance at the Australian School of Business in Sydney, part of the University of New South Wales. "It makes sense to give the person who effectively controls the bank the formal title."
Mr Diamond was beaten to the CEO job by Mr Varley in 2003 and became president of the bank in 2005.
"The board could not risk losing Mr Diamond by overlooking him again," said Chris Wheeler, an analyst at Mediobanca SpA in London.
Mr Diamond will receive £1.35m (€1.6m) in salary and an annual incentive award worth 250pc of salary. He is also eligible for a long-term performance award of as much as 500pc of base salary in 2011, the company said. He received a salary of £250,000 (€301,179) last year, deputy chairman Richard Broadbent said in April.
In April, UK Business Secretary Peter Mandelson described Mr Diamond as the "unacceptable face" of banking after earning what he said was £63m (€75.9m), 'The Times' of London reported. Most comment on Mr Diamond's pay "is wrong", the bank said later that month. (Bloomberg)