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Barclays Concedes Bob Diamond's Not Forever

(c) Sky News 2012

Barclays (LSE: BARC.L - news) is to accelerate plans to groom Bob Diamond's successor, even as board members close ranks around the chief executive.

I can reveal that directors told leading shareholders this afternoon that speeding up the bank's succession planning would become a priority, even if Diamond manages to keep his job in the wake of the LIBOR-fixing scandal.

In a series of discussions with investors designed to shore up support for Diamond, board members signalled that the chief executive was considering requests from City institutions to make a meaningful financial gesture that could involve handing back millions of pounds in past bonuses.

They also pledged to:

  • Realign financial distributions so that shareholders will in future be handed a greater share of rewards relative to Barclays employees in an attempt to avoid another damaging dispute over pay next year;
  • Become the standard-bearer for ethical conduct in the banking sector despite the recent string of scandals which have further stained the industry's reputation;
  • Make a robust case for its efforts to preserve its financial health during the 2008 credit crunch when directors appear at the Treasury Select Committee later this week. That is likely to involve Diamond disclosing email records and memos which I understand exist relating to a conversation between he and Paul Tucker, now the deputy governor of the Bank of England, about the integrity of the LIBOR-setting process.

I also understand that the leading candidate to become the next chairman of Barclays is poised to depart the board of easyJet, the budget airline, regardless of whether he is appointed as the successor to Marcus Agius, who resigned today.

Sir Mike Rake, who was today named deputy chairman of Barclays, has told friends that he is likely to retire as easyJet's chairman when he has completed three years in the post at the end of this year.

Lord Davies, who had been touted for the Barclays role, tonight ruled himself out of the running for the Barclays chairmanship and backed Rake's candidacy for the job.

"Mike would be an outstanding chairman," Lord Davies told me.

EasyJet (Other OTC: EJETF.PK - news) said: "It's business as usual at easyJet where Sir Mike Rake will continue as easyJet's Chairman. He is supported by a high-calibre board, which has recently been refreshed, and a strong deputy chairman in Charles Gurassa."

Rake will move swiftly to appoint someone to head the independent audit of Barclays’ business practices that was demanded by shareholders and confirmed by the bank this morning.

That inquiry will run in parallel to the cross-parliamentary probe announced this afternoon by David Cameron and George Osborne, which will examine the LIBOR-setting regime as well as a professional standards code for the banking sector.