Old guard wins the day

IT IS ONE of the plum jobs. The chief executive post at Barclays carries a base salary of £1.1m and the prospect of bonuses many times that. It's a permanent power trip - bossing 64,000 people and being in charge of £400bn in assets. It's a passport to rub shoulders with ministers and tycoons, not to mention football stars (Barclaycard sponsors the Premiership). And there's a good chance of a knighthood at the end of it too.

The job is all of that, and yet it has been a poisoned chalice too. Andrew Buxton was vilified when he ran the bank as executive chairman in the early 1990s. Martin Taylor's health has never fully recovered from his unhappy five-year spell in the post. His successor, Mike O'Neill, lasted a day because of health concerns.

Matt Barrett, the charismatic Irish-Canadian in the job since 1999 is reckoned to have made a good fist of it but not before a baptism of fire: in his first few months he was roasted over branch closures, spanked over his generous pay packet and ridiculed after his ex-wife appeared on the internet in a fur bikini.

Other banks such as HSBC and Royal Bank of Scotland seem to manage succession smoothly and without remark. Barclays has been less fortunate.

Until Thursday, the succession plan was looking doubly confused. Barrett's contract was due to expire next year - at the same time as his chairman, Sir Peter Middleton, was due to retire. With neither successor named, shareholders were beginning to get impatient, fearful that the bank could risk being rudderless at a crucial moment.

Thursday's announcement puts a stop to that and ends the ceaseless speculation about the chief executive job - which was widely seen as a two-horse race between internal candidates Bob Diamond, chief executive of the investment banking division Barclays Capital, and John Varley, the group finance director.

A third serious contender, John Stewart, who ran Woolwich before its takeover by Barclays three years ago, disappeared from the running when he abruptly quit earlier this year to join National Australia Bank.

There were other outside contenders, including David Roberts, who runs personal financial services, Gary Hoffman, head of the fast-expanding Barclaycard business and Naguib Kheraj, who runs the private client division.

The decision is a coup for Varley, a patrician figure in the bank, who has worked there for more than 20 years and knows every aspect of the organisation inside out. He is a familiar character in the City after running the core retail bank and then presenting results as the chief numbers man.

Varley is associated with the old guard at Barclays and is married into one of the founding families, the Peases. The appointment might have the whiff of nepotism but this is unfair because the family shareholding has long since been dispersed. (Barclays bought the Darlington bank of J & JW Pease for £50,000 in 1902, one of 18 acquisitions made under the chairmanship of the aggressive Francis Bevan.)

Educated at Downside public school and Oxford, Varley qualified as a solicitor and practised law before joining the bank. He has two children.

He came out badly from the media bashing Barclays received over branch closures, cash-machine charges and fat-cat pay in 2000 when he was running the retail side.

He was eviscerated by John Humphrys on the Today programme, though his supporters argue he was brave enough to put his head above the parapet when other directors made themselves scarce.

He also appeared to be losing out in the running to Stewart who, before his departure, had been appointed deputy chief executive, a rung higher than Varley in the subtly shaded Barclays hierarchy.

He has had roles in Barclays Merchant Bank, the old securities division BZW and in asset management as well as in the core retail business. A keen racegoer, he is a non-executive director of Ascot Authority Holdings, which runs Ascot racecourse.

Today's announcement is a bitter blow for Diamond, a charismatic American, who is credited with turning the fixed interest division into a serious and efficient player in the international capital markets. But he had no experience of running a listed company - he is not on the Barclays main board - and no retail banking experience.

While Varley has rubbed shoulders with the Barclays non-executive directors for the past five years, Diamond was inevitably seen as more of an outsider. He joined Barclays in 1996 having previously worked as head of fixed income and foreign exchange at Credit Suisse First Boston.

Before that he worked at Morgan Stanley. He began his career as a business school lecturer at the University of Connecticut. His success at Barclays Capital was seen as a seriously compelling job application for the top post at Barclays. Today those hopes were dashed.