Barclays seeks backing to make Barrett chairman

Barclays has been canvassing its shareholders to find out whether they would approve of the elevation of the bank's chief executive, Matt Barrett, to the chairman's position in defiance of the recent Higgs proposals on corporate governance.

The bank's chances of winning shareholder approval for such a move were boosted yesterday when Derek Higgs took the sting out of his controversial proposal that chief executives should not become chairmen of their own companies.

Speaking at the National Association of Pension Funds conference in Edinburgh yesterday, Mr Higgs repeated his opposition to "company chief executives surrounded by yes men" who tend to have climbed the ranks of one company from moving into the chairman's role.

But he added that "someone who has come in from a different company, as has happened with Marks & Spencer and maybe Barclays", could still become the chairman of their company and be able to act as a proper counterbalance to their chief executives.

Luc Vandevelde took over as chairman of Marks & Spencer after he was brought in from outside the group to be its chief executive.

Barclays is known to be keen for Mr Barrett, its charismatic chief executive who joined the bank in October 1999, to replace Sir Peter Middleton when he retires. However, the high street giant is concerned that the City would baulk at the move in the light of the Higgs recommendations. Barclays, The Independent has learned, has been canvassing shareholders on the subject to gauge their views.

Barclays responded to Mr Higgs' observations yesterday, saying: "We would support the point he has made. We do not support the idea of an inflexible rule against chief executives becoming chairmen." But the bank stressed no decision had been taken on its succession planning. Sir Peter, who is 68, may continue in his role until he is 70 with Mr Barrett remaining as chief executive for that period as well.

The bank in some ways favours this course of action because many of the rising stars who could take over as chief executive have just been given major projects in their own divisions. The candidates include Bob Diamond, who has been asked to turn around Barclays Global Investors, and David Roberts, who has been given responsibility for retail banking. John Varley, the finance director, has been tipped as the most likely successor to Mr Barrett but he has his detractors as well as his supporters.

The planned changes to Barclays' top management come at a sensitive time. In common with most of its high street rivals Barclays is struggling to produce growth in its core market and there is speculation in the City that Barclays is preparing to embark on a cost-cutting operation including major job losses in the course of the next three years.

This could be brought about by a series of outsourcing arrangements for its back office processes but the bank said it had no current plans to outsource more of its processing facilities.

Mr Higgs, who has come under heavy criticism for his review of the role of non-executive directors, yesterday struck a conciliatory tone. He said he was "comfortable" with the possibility that his recommendations would become "less prescriptive" when they are included in the Combined Code. But he took a swipe at his critics, who include high-profile industrialists such as Sir Nigel Rudd, the chairman of Pilkington, and Dixons' former chairman Sir Stanley Kalms.

Much of their criticism has centred on the fear that Mr Higgs' proposals to boost the role of the senior independent director would undermine the position of the chairman.

Mr Higgs said: "I find some of the reaction excessive. I hope it is not driven by insecurity on the part of people coming up with it." He said his proposals, which are likely to be included in a new Combined Code on Corporate Governance, were not intended as a set of rules which companies would either comply with or breach, risking shareholders' ire.