Barclays explains Barrett elevation

Barclays caved in to pressure from the City yesterday by writing to its entire shareholder base to explain why it is allowing Matt Barrett to step up from the role of chief executive to chairman.

Companies whose chief executives take on the role of chairman break the Higgs code of best practice in boardrooms, which came into force a week ago.

Barclays is the first public company to have followed recommendations that companies which do not comply with the Higgs rules on corporate governance should explain their reasons for not doing so.

Derek Higgs, the investment banker who wrote the new guidelines, believes chairmen who have also been responsible for the day to day running of a business may not be able to be independent in their assessment of its strategies and of other directors.

Barclays had come under fire from powerful shareholder bodies, the Association of British Insurers and the National Association of Pension Funds, after it announced Mr Barrett's change of job without offering a justification for the move.

In a letter to 888,000 shareholders, current chairman Sir Peter Middleton, said he wanted to "explain personally how we have arrived at this important decision".

Mr Barrett, who has been chief executive of Barclays since October 1999, emerged as the board's "unanimous choice", the letter says, after both internal and external candidates were considered.

The ABI and NAPF welcomed the letter from Barclays, which came after the bank had said it did not have to explain the change in its senior management until its annual report in March 2004.