LONDON BRIEFING:Robert Swannell lacks retail experience but he has the credentials to please the Square Mile, writes FIONA WALSH

HE’S NEVER run a FTSE 100 company before and his experience of the retail industry extends to just 18 months at HMV. But the choice of Robert Swannell (59), a veteran of the investment banking industry, as new chairman of Marks & Spencer has been widely applauded in the City of London.

Running the show at M&S, whether as chairman or chief executive – or in Sir Stuart Rose’s case, both – has always been one of the toughest jobs in the British high street and there is no doubt that it will become even tougher in the new age of austerity.

At the same time, there are serious doubts over the strategy pursued by Rose since he was parachuted in at the group in 2004 to fend off the takeover bid from retail billionaire Sir Philip Green.

Fixing the future direction of M&S will largely fall to Marc Bolland, the former Morrisons man who took over as chief executive of Britain’s biggest clothing retailer in May.

The City is eagerly awaiting delivery of Bolland’s strategic vision for the group in the autumn and analysts are particularly keen to hear how he plans to woo younger customers, sort out its online presence and get the food operation back on course.

A strong chairman is vital though if Bolland is to do his job properly and, despite his lack of experience in the retail industry, Swannell is judged to fit the bill. He does know something about M&S – it was Swannell’s firm, Citigroup, that Rose insisted on hiring to defend MS against the Green takeover six years ago.

While Rose is a retailer through and through, starting his career as an M&S management trainee, Swannell is an archetypal investment banker – or merchant banker, as they used to be called in the less brash days of the 1970s when he first joined the noted City firm J Henry Schroder.

Schroders was taken over by Citigroup in 2000 and Swannell ended his 33-year association with the firm in March, when he stepped down as head of Citi’s European operations.

In his three decades there, he amassed a wealth of experience of takeover bids – as well as successfully defending M&S, he advised glassmaker Pilkington on its sale to the Japanese and ferries group P&O on its takeover by Dubai Ports, securing generous prices for both companies.

He also worked on Pernod Ricard’s acquisition of Irish Distillers, citing the deal as one of his career highlights. The transaction was unusual as Pernod Ricard was able to take over the firm for a lower offer than that made by rival bidder Grand Metropolitan.

The appointment of such a seasoned investment banker to head the board at MS has sparked speculation that the retailer may be contemplating some M&A activity of its own.

There were strong rumours recently that M&S was taking a look at Ocado, the newly floated grocery-delivery business.

It is Swannell’s close links with the City though that are the big attraction. Relations between the retailer and the investment community have become strained during the last few years of Rose’s tenure. His controversial decision to take on the role of executive chairman, in a clear breach of corporate governance best practice, infuriated the company’s institutional investors, as did his salary of almost £875,000.

Swannell joins the M&S board as a non-executive director in October and will take over the chair in early January, meaning Rose will depart several months earlier than initially planned.

The new chairman’s salary will also be a more modest £450,000 a year once he steps up to head the board although he is, of course, a non-executive chairman.

As Bolland sorts the strategy, so Swannell must repair relations in the Square Mile. There can be few who are better placed to do so and his more conservative approach is likely to go down better at the institutions than Rose’s party- loving personality.

Even the notoriously irascible Sir Rick Greenbury, who ran M&S in the late 1980s and the 1990s, welcomed Swannell’s arrival. The new chairman had “all the credentials,” he said. “The City can’t complain about this fellow, for God’s sake, but they will.”

There may be some complaints too from M&S’s army of loyal small shareholders, most of whom appear to idolise Rose. They particularly love his bravura agm performances, where he delivers sparkling discourses on anything from lingerie to luggage.

At least the next M&S agm is not scheduled until July 2011, giving the new chairman a good 11 months to work on his routine.

Fiona Walsh writes for the Guardiannewspaper in London