Barclays announced yesterday that Mr John Varley was to become chief executive of the UK's third-largest bank, with Mr Matt Barrett stepping up to become chairman.

The announcement comes after intense speculation that Mr Barrett did not want to be chairman and was about to leave the bank when Sir Peter Middleton retired.

Barclays said that Mr Barrett - who is originally from Tralee but grew up in Kells - would remain as chief executive and step up to become chairman when Sir Peter retired at the end of 2004.

Mr Varley, who is finance director and is married into one of Barclays's founding families, will become deputy chief executive in January and then succeed Mr Barrett.

Mr Barrett, who spent most of his career with the Bank of Montreal, dismissed suggestions that he had been reluctant to take the post of chairman.

"I work for one of the best companies in the world, live in one of the best cities in the world and I'm having a great time in the UK... It was not a tough decision."

Mr Varley was considered one of the two most likely candidates to succeed Mr Barrett along with Mr Bob Diamond, the American-born head of Barclays Capital.

On Wednesday, Sir Peter said Mr Diamond was disappointed but would stay on at Barclays.

"We've got a lot of disappointed people but there can only be one winner," Sir Peter said. "We've picked the most suitable person... Bob has a huge new role as chairman of the asset management business," he added.

Sir Peter said Mr Diamond would not join the board "because he spends a huge amount of time out of the country, which does not fit in with monthly board meetings".

However, some believe Mr Diamond, one of the best paid executives at Barclays, would not particularly have wanted to join the main board because this would mean his salary would have to be disclosed. - (Financial Times Service)