A few months ago, at Barclays' annual dinner for senior financial journalists, John Varley cut a solitary figure. Matt Barrett, the expansive Irish-Canadian who turned the bank from a laughing stock to a powerhouse, was telling another of his stories, glass in one hand, cigarette in another, a crowd of admirers around him. Bob Diamond, the intense, smart American who runs Barclays Capital, was explaining his view of the world to a group who craned their ears to listen.
Varley, though, stood in a corner, chatting to a couple of people about his distrust of the single European currency and his fears of deflation. Cerebral and a little shy, this member of traditional clubs Brooks's and the Army & Navy, who cites fishing as his only recreation, seemed out of kilter with the informal Barclays created under Barrett. If anyone had guessed who the new chief executive might be, they would not have gone for Varley.
Yet on Thursday, after weeks of speculation, the 47-year-old finance director was named as Barrett's successor, with Barrett stepping up to become chairman, much to the constenation of many in the City.
"Safe pair of hands" is the phrase most often used to describe Varley. And he does little to dispel this. Don't expect any fireworks when he assumes the top job in January 2005. "I regard myself as a co-author of the strategy we are pursuing," he says. "I don't see a need to make a substantial change to that strategy."
Mind you, the fireworks could come from either Diamond's disappointment at not getting the job, or the potential tension if Barrett can't adjust to being a non-executive chairman.
Varley, though, goes out of his way to praise Diamond: "I've watched and admired how he developed Barclays Capital." And he defends the curious decision to give Diamond extra responsibilities - putting him in charge of the fund management arm Barclays Global Investors - but not a seat on the main board.
It seems it was Diamond's choice not to join the board, ostensibly because he is too busy. But many suspect it is so Barclays can keep his stellar pay package, believed to exceed £10m a year, secret. "I feel no sense of embarrassment," says Varley. "I would suggest there is no defect. It is a microcosm of how we work with Bob. The way Bob uses his time and manages his business is highly successful. Why should we change it?"
As for working with Barrett, he is sanguine. "I'm confident about our relationship and this is born of deep experience," he says. "Does Matt have a dog and do a bit of barking? I've not known him do that."
And Varley counters suggestions that investors will find his "quiet man" image a disappointment after the flamboyant Canadian. "It's a good thing he is a difficult act to follow." As many point out, for the first time in more than a decade, a new chief executive of Barclays is not being appointed amid a crisis. "In that respect I am a lucky man," Varley laughs.
But there are still nagging questions about Varley. One concerns his blue-blooded pedigree and his connections. Varley is one of the last links to the five families who founded Barclays. He is married to a member of the Pease family, who sold their bank J & JW Pease to Barclays in 1902.
"It is partly because of marrying into one of the families that I am here," he admits. No, he does not confess to being the beneficiary of nepotism. But he says that when he went into the City 20 years ago, his father-in-law organised an interview for him at was then Barclays Merchant Bank. "Without him I probably would not have considered them."
Varley was at Barclays Merchant Bank, which became BZW, for a dozen years. He then left for a year, working at fund manager Odey Asset Management, before scuttling back to the warm bosom of the bank. He admits that Odey was a wake-up call: "You can't hide your weakness in a small organisation; you can hide them within Barclays."
One weakness Varley could not hide, even at Barclays, was his lack of a common touch. This was exposed three years ago when he was running the retail bank and faced a lot of flak for shutting 171 branches. Perhaps his least comfortable moment was a grilling on Radio 4's Today programme where he came across as distant and out of touch.
Varley is contrite: "When I took over, the cost-to-income ratio in that business was 68 or 69 per cent, I can't remember exactly, but it was well over 65 per cent. We had some stuff we had to do on behalf of our customers. We had some stuff to do on behalf of our shareholders. I made some miscalculations. I accept that. At times, while managing aggressively, I was insensitive. We were not sensitive enough to some of the local considerations and I have learned from that."
But life is kinder now for Varley could hardly be taking over at a better time. In Barclaycard, Open Plan, Barclays Global Investors and Barclays Capital, the bank has a portfolio of businesses of which it can be proud. "We are product rich," says Varley, and the question is how to exploit this bounty.
"Relationship expansion is a legitimate aspiration," he says. So does this mean buying "distribution channels" - i.e. another bank?
Varley won't be drawn. But history suggests Barclays does not need to buy businesses to grow. One example is the joint venture with Legal & General to sell the insurer's products in Barclays branches. The deal was struck at a time when rivals were buying up life companies to get their product range - Lloyds TSB's £7bn purchase of Scottish Widows being a particularly painful example. "At the time it was a big strategic call," says Varley of the Legal & General deal. "Looking back, it was clearly the right one."
If Varley gets things right, he could be chief executive for more than a decade. It's not an idea he ponders on too much. But for a bank with a history of instability, "safe hands" at the helm is an enticing prospect.Reuse content