Barclays explanation sought

The Influential Association of British Insurers yesterday demanded Barclays offer a formal explanation for moving its chief executive, Matt Barrett, up into the chairman's role, as the move contravenes the Higgs code on corporate governance.

The ABI wrote to Sir Peter Middleton, the chairman of the bank, asking for a "clear and full" explanation of the move, which will see Mr Barrett replace Sir Peter at the end of next year. "In general investors are wary of chief executives moving up to the chairmanship because they fear the new incumbent may not have objective oversight of strategy and its implementation," the letter spells out.

Derek Higgs, the investment banker appointed last year by the Government to review the role of non-executives in the boardroom, stipulated that chairmen should not have held the chief executive's position at the same company, in order to guarantee their independent position. However, he said if companies wanted to deviate from this and his other proposals, they should explain why.

The ABI and the National Association of Pension Funds, have spoken out in this year's reporting season about the need for companies to improve corporate governance. They are keen to use Barclays' decision to make clear that companies must take the "comply or explain" rule seriously.