John Varley, Barclays' new chief

Mr Varley will move up to the position of deputy chief executive in January, before becoming group chief executive in December 2004.

The current chief executive, Matthew Barrett, is to become chairman, replacing Sir Peter Middleton who is retiring.

Mr Varley had been one of the favourites to take over from Mr Barrett and the bank said the changes marked a "smooth transition of leadership".

'Unique' chairman

The movement of Matthew Barrett from chief executive to chairman appears to go against the recommendations of the Higgs Review into best boardroom practice.

However, Barclays defended the decision, saying he was "uniquely" qualified for the role, and adding that they had consulted closely with shareholders before the move.

"(Mr Barrett) is one of the world's most senior international bankers of many years standing," a Barclays spokeswoman said.

She added that Higgs had noted there was a difference between cases where people became chairman after spending many years at a firm, and those - such as Barclays - where the person was a relatively new recruit.

Mr Barrett joined Barclays four years ago from Bank of Montreal.

Continuity

Analysts said there was unlikely to be a big change in the way the bank was run.

"(Varley's) just going to carry on where Matt Barrett left off," said Noel Reynolds, banking analyst at Commerzbank.

Naguib Kheraj, currently chief executive of Barclays Private Clients, will replace Mr Varley as finance director.

Barclays also announced that investment banking head Bob Diamond - who was also thought to be in the running for the top job - has been asked expand the group's investment banking and asset management businesses worldwide.