American Bob Diamond will be the next chief executive of Barclays when John Varley steps down next year.

Diamond, who is currently the head of Barclays Capital, will take over in time for the annual meeting in April, following today's surprise announcement. 

Varley will step down on 31 March next year and Diamond will become president and deputy chief executive from 1 October, ahead of taking up the role of chief executive.

As one of the highest-paid bankers in the world, Diamond's remuneration package in the new role is sure to be controversial.

He has made about £100 million as head of the bank's investment wing. His pay has frequently exceeded £10 million a year and last year he received £26.8 million cash from the sale of his shares in Barclays Global Investors.

His base salary will be £1.35 million, Barclays said, with the rest awarded in bonuses. He is expected to earn up to £11.5 million a year.

'The compensation arrangements have been benchmarked against a peer group of global universal banks, industrial companies and financial services institutions,' the bank says.

This compares to HSBC boss Michael Geoghegan's potential package of £16.8 million following his move to Hong Kong earlier this year.

Jerry Del Messier and Rich Ricci will step up as presidents of Barclays Capital to replace Diamond.

Marcus Agius, Barclays chairman, calls Diamond 'superbly qualified', with 'a proven track record as a business leader'.

'I am honoured by the board's confidence in me and greatly motivated by the challenge of leading Barclays during the critical period ahead,' Diamond says. 'As a leading global universal bank, Barclays has the right model, the right strategy and above all the right people to deliver for all our stakeholders.'

David Buik, market commentator at BGC Partners, says: 'This is such good news for the UK banking sector. It will send a strong message out to government and to Sir John Vickers's independent banking commission that the banking sector in the UK is strong, robust and in no mood to surrender its sovereignty to either bureaucrats or politicians.

'Though Bob Diamond comes from an investment banking background, above all else he is a brilliant delegator; and let's face it, the art of good management is delegation.'

The banking gaint, which did not take any government help during the financial crisis, reported pre-tax profits of £3.95 billion for the first half of the year - up 44 per cent on the same period last year. Investment bank arm Barclays Capital provided much of the boost, with profits of £3.4 billion.

Barclays shares opened down sharply on the news, falling nearly 2 per cent, making it one of the biggest losers on the FTSE 100 in early trading.

Meanwhile, HSBC chairman Stephen Green is also moving on to become a government trade minister.