LONDON, Sept 7 (Reuters) - British bank Barclays hasappointed Bob Diamond, the head of its investment and wealthmanagement business Barclays Capital, as its new group chiefexecutive to replace current head John Varley next year.

Varley, who took over in 2004, will step down as chiefexecutive and from the Barclays boards on 31 March, 2011 afterhe indicated that he wanted to move on when he turned 55.

As part of the transition Diamond, who turned 59 in July,has been credited with building Barclays Capital into a majorinvestment bank since joining Barclays 14 years ago, will becomepresident and deputy group chief executive next month.

"As a leading global universal bank, Barclays has the rightmodel, the right strategy, and above all the right people todeliver for all our stakeholders," Diamond said in a statement."We face the future with confidence."

Diamond's long-time lieutenants Jerry del Missier and RichRicci, become from Oct 1 co-chief executives of BarclaysCapital, in addition to being co-chief executives of theCorporate and Investment Bank.

Diamond, who is currently based in the United States butwill move back to London, will receive a salary of 1.35 millionpounds ($2.07 million) and his annual incentive awardopportunity will be up to 250 percent of his base salary.

The bank said it intended to award a long term,performance-based share incentive of 500 percent of base salaryin 2011.

Barclays Chairman Marcus Agius said Diamond had a proventrack record and was superbly qualified for the position.

"In making this appointment, the board is consciouslyensuring continuity in management, strategy and our focus ondelivering for customers, clients and shareholders," he said. ($1=.6511 pounds) (Reporting by Kate Holton; Editing by Greg Mahlich)