Robert Diamond, the architect of Barclays PLC's investment banking expansion, was appointed the bank's chief executive and pledged to boost its consumer unit.
Diamond will become deputy CEO next month before John Varley steps down at the end of March, Barclays said Tuesday. He will move to London from New York and receive as much as 11.48 million pounds ($18 million) in salary and bonuses as the CEO.
Chairman Marcus Agius defended Barclays' universal model, where it acts as a consumer and an investment bank, as a U.K. government commission considers forcing lenders to separate the businesses. Barclays, the U.K.'s third-biggest bank, is trying to cut the proportion of pretax profit generated by its investment bank to a third, 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," Diamond told reporters on a conference call. "There's no change in strategy here."
Simon Maughan, an analyst at MF Global in London, said "the initial reaction to this is likely to be negative because of Diamond's focus on the investment bank, but it shouldn't be. Barclays has been 70% 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 the co-CEOs of the investment banking unit that Diamond built up since he joined in 1996. Anthony Jenkins oversees Barclays' retail bank.
Massachusetts-born Diamond led Barclays' 2008 purchase of Lehman Brothers Holdings Inc.'s U.S. 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 Group Inc. and Morgan Stanley. The unit's revenue was 11.6 billion pounds last year, up from 5.2 billion pounds in 2008.
Diamond also led the talks last year to sell the Barclays Global Investors unit to BlackRock Inc. for $15.2 billion.
"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."
Diamond was beaten to the CEO job by Varley in 2003 and became president of the bank in 2005.
"The board could not risk losing Diamond by overlooking him again," said Chris Wheeler, an analyst at Mediobanca SpA in London. "Despite his apparent support of the universal banking model, Diamond will be considering whether Barclays will obtain a higher rating as a pure investment/corporate banking/wealth manager."
