Barclays executive steps back from central role in new Mayor's Fund

The City's best-known banker was due to help Boris Johnson set up and run his Mayor's Fund, which will raisemoney to help underprivileged young Londoners.

But Mr Diamond, 57, is now planning to spend more time in his native America to expand the profitable Barclays investment banking arm there.

The move means he can no longer play a central role in the operations of the multi-million pound fund as briefed at the time of his appointment.

It is a blow to Mr Johnson, who used the recruitment of the chief executive of Barclays investment banking to boost his credibility in the Square Mile during the mayoral election campaign.

City Hall sources acknowledged that Mr Diamond would not be in the capital frequently enough to play a major role in the Mayor's Fund.

But they revealed that the Mayor had approached another "distinguished UK-based figure with credibility in business circles" to run the organisation instead.

A spokesman for Mr Johnson said: "The position is that Bob Diamond will continue to advise and champion the Mayor's Fund abroad, and was always intended to be an adviser. We will be making an announcement on the Mayor's Fund in due course."

He added: "We're looking at what needs to be done to get this off the ground. It is not only about getting rich people to put their hands in their pockets but about getting other people to help in small ways in the spirit of that. If you can't give your money give up your time."

The Mayor will now rely more heavily on other fund advisers, including retired Goldman Sachs banker Richard Sharp and charity fundraiser Wasfi Kani.

Last week he sought tips from Prince Charles, who set up his successful Prince's Trust organisation to support disadvantaged youths.

A spokesman for Mr Diamond insisted that the Barclays Capital chief would still be involved in the Mayor's Fund, even if he was busy expanding his business in America at the same time. The spokesman said: "Bob remains committed to the Mayor's Fund and he won't be walking away from it."

Mr Diamond earned £6.8 million in salary and bonuses last year. However, his total package came to more than £21 million as he collected a further £11.4 million from an executive share award scheme and £3million from a share performance scheme.

He landed a £15million profit from the sale of his seven-bedroom home in Kensington earlier this month.

The banker is understood to be buying a more modest apartment for a base in the capital now that his children are at university in the US.

Mr Diamond, who was advising the Mayor in a voluntary capacity, is known for his sportsman-like leadership style, running his business as a meritocracy. He is not registered as a donor to the Conservative Party nor has he publicly aired his political views.