Bob Diamond's new job at Barclays leaves his critics lost for words

Barclays yesterday squared up to its critics by appointing the man who has come to epitomise casino capitalism as its new chief executive.

Bob Diamond, described by the former business secretary Peter Mandelson as the "unacceptable face of banking", has been one of the most successful but also controversial bankers in Britain. Yesterday shares in Barclays fell as his appointment looked set to ignite another storm.

Vince Cable, the Business Secretary, refused to be drawn on what he thought of the appointment of Mr Diamond – who has earned nearly £100m from his time at the bank and could add more than £11m in his first year as chief executive. But at the height of the banking crisis in October 2008, Mr Cable said of Barclays' investment arm, which Mr Diamond headed: "More than the other banks, Barclays operate a high-risk casino operation which makes the bank particularly unstable but which gives very rich pickings to the top executives. The British Government must not simply let this pass."

One unnamed minister told the BBC yesterday that Mr Diamond's promotion was "like seeing a bank being taken over by a casino". And a member of the Liberal Democrat Treasury team accused Barclays of "living in a world of their own".

Barclays' chairman, Marcus Agius, paid tribute to Mr Diamond, describing his record as "second to none". Had he been passed over for the position he would have been all but certain to leave, probably for a job in the US, where he is currently based. He will now have to move back to London from his luxury New York home, where he has been putting together Barclays operations with those of the bankrupt Lehman Brothers, bought at the height of the financial crisis.

One source said yesterday: "Make no mistake, if Bob wants something done, he knows the people to do it. He has a network of contacts willing to do his bidding."

Mr Diamond has also cultivated influential friends elsewhere among London's elite, including the Mayor, Boris Johnson, and Roman Abramovich, the Chelsea owner whose club Mr Diamond supports. He used Barclays' sponsorship of the Premiership to hand the trophy to John Terry when Chelsea won the title in 2006.

In the City he has the profile and salary of a rock star. At Barclays press conferences he is surrounded by a phalanx of journalists who hang on his every word. Such is the extent of his star power that the bank's pr people have, in the past, not been above taking journalists aside to ask if they wouldn't rather speak to another of the bank's top people, who have sometime looked lonely and bereft by comparison.

But as criticism of the sector has grown in the wake of the financial crisis, his relationship with the media has grown just as strained as his relationship with politicians. It culminated in an outburst last year when he berated reporters for questioning Barclays about pay, saying they should be "proud" to have a top-tier bank like Barclays in London.

He has also angrily hit back at accusations that Barclays indulges in "casino capitalism", saying they are "unfair" and "miss the point". He has further stoked tensions by issuing veiled threats about what Barclays and other banks might do if politicians crack down too hard, pointing out that the financial services industry is "very mobile".