Diamond named as new Barclays chief

Mr Diamond, who is estimated to be worth 95m, will take over from John Varley after the incumbent steps down on March 31 next year, the bank announced.

In a dramatic day for the banking sector, it is also expected that HSBC chairman Stephen Green will move on to become Trade Minister in the Government.

Mr Diamond, one of the world's highest paid bankers, joined the group in 1996 and currently serves as president and chief executive of Barclays Capital, the firm's investment arm.

The 59-year-old American said he was "honoured" to take on the role in "the critical period ahead".

Mr Diamond will receive an annual salary of 1.35m, up from the 250,000 he has received every year since 1999, with a potential annual bonus of up to 3.375m

He will also be entitled to long-term performance-based incentive shares worth 6.75m next year.

Barclays said the payments were benchmarked against a peer group of other global banks and financial services firms.

Married with three children, Mr Diamond is an adviser to London Mayor Boris Johnson and currently sits as a trustee to the Mayor's Fund for London.

It has been suggested that his appointment could be seen as controversial among members of the coalition, as his lack of experience in traditional high street banking will be at odds with the Government's aims.

It comes at a time when ministers are urging Britain's banking sector to open up lending to small businesses in a bid to aid the economic recovery.

Mr Diamond's wealth may also raise a few eyebrows.

The Sunday Times Rich List estimates that the Chelsea football supporter sits on a personal fortune worth around 95m. He is thought to have made 11.6m last year despite waiving a pay rise.

Mr Diamond is expected to relocate to London from New York, where he has spent the past two years integrating Lehman Brothers into Barclays Capital.

Under his stewardship, the investment banking division has been the powerhouse of profits growth at Barclays during recent years.

Mr Varley will become a senior adviser on regulatory matters to Mr Diamond and the board until September 30 2011.

The outgoing chief executive, who is chairman of Business Action on Homelessness, is expected to concentrate on charitable work and a range of non-executive directorships.

Mr Varley said: "What he (Mr Diamond) has accomplished in his various roles at Barclays demonstrates clearly that he is a great banker and leader, and an outstanding business builder. I know that Barclays will flourish under his stewardship."