Applicants to replace Bank of England Governor Mervyn King will have until Oct. 8 to inform Chancellor of the Exchequer George Osborne that they’re interested.
Osborne told Parliament yesterday that he will start the search for a successor this week and promised a fair and open process. The Treasury will place an advertisement in the Economist magazine on Sept. 14, beginning a three-month recruitment process involving interviews with senior civil servants who will draw up a shortlist for Osborne to consider.
“Mervyn King has been an outstanding governor of the bank,” Osborne said in London. The search for his replacement will be “conducted with a fair and open competition.”
Osborne’s task to replace King when he retires at the end of June has been complicated after the Libor scandal embroiled several potential candidates including the former front-runner, Bank of England Deputy Governor Paul Tucker. The new governor will be given sweeping powers over financial stability, bank regulation and monetary policy if lawmakers approve legislation currently making its way through Parliament.
King, 64, is retiring after completing the maximum tenure of two five-year terms. His successor, who will serve a single eight-year term, will face a panel comprised of Treasury Permanent Secretary Nicholas Macpherson, Second Permanent Secretary Tom Scholar and David Lees, chairman of the bank’s court. Treasury Committee lawmakers from the House of Commons will also question the governor before the job commences.
The shortlist of candidates will be presented to Osborne, who will recommend his choice to Prime Minister David Cameron. Deputy Prime Minister Nick Clegg from the junior coalition Liberal Democrat Party will also have a say in the matter. Queen Elizabeth II then gives formal approval on the final choice.
The job ad calls for someone who can inspire “confidence and credibility both within the bank and throughout financial markets.” It leaves open the door for candidates from private sector financial institutions.
“The successful candidate will have experience of working in, or with, a central bank or similar institution; or will have worked at the most senior level in a major bank or other financial institution,” the advertisement will say, according to the Treasury.
Tucker is no longer the front-runner for the post, according to odds provided yesterday by Paddy Power Plc showing him in third place after Financial Services Authority Chairman Adair Turner and former chief U.K. civil servant Gus O’Donnell. Tucker’s odds are at 5/2, meaning a successful 2-pound ($3) bet would win a 5-pound profit.
A spokesman for the Bank of England declined to comment on whether Tucker or any other central bank official will apply.
Tucker, 54, denied he had put pressure on Barclays Plc to lower its Libor submissions or come under political pressure to do so after the bank released details of a 2008 phone call with Robert Diamond, then head of its investment division.
His testimony to lawmakers on July 9 also stoked criticism of oversight failures at the central bank after he said that when concerns about Libor rates were raised at a meeting of bankers and regulators in 2007 it “didn’t set alarm bells ringing.”
The most outspoken critic of banks among the potential candidates has been Turner, 56, who said in 2009 many of the activities carried out by financial-services companies were “socially useless.” In July, he signaled his interest in the job, saying in an interview that he would “obviously not rule myself out.” Turner is the favorite with odds of 7/4, according to Paddy Power.
O’Donnell, 59, has also refused to rule himself out and is placed second-favorite with Paddy Power at 9/4. “When they do advertise it, I’ll make up my mind whether I want to apply or not,” he said in an interview after he joined Toronto-Dominion Bank as an adviser in June.
Banking figures that have been linked to the Bank of England role include Stephen Green, the former chairman of HSBC Holdings Plc who is now U.K. trade minister, and ex-Barclays Chief Executive Officer John Varley.
Former Bank of England Deputy Governor John Gieve said that appointing a banker may not be the optimal choice.
“It would be very difficult for a banker in current circumstances who has recently been in office to carry conviction,” he said at an event in London today.
Bank of Canada Governor Mark Carney signaled last month that he isn’t a candidate. Asked on the BBC’s “Hardtalk” program whether he would be interested, he said he’s “very focused” on his current posts and “interested in who they pick” to replace King. Questioned on whether his answers meant “a no or a never consider the job?” he said: “It’s both. How’s that?”
A Bank of Canada spokesman referred to Carney’s previous comments on the matter.
“There’s a general impression that whoever gets appointed needs to be as pure as Caesar’s wife,” former Bank of England policy maker Charles Goodhart said in a Sept. 4 interview, referring to Julius Caesar’s comment that his wife must be above suspicion. “In the present climate, and after all the events of the past five to six years, it’s actually quite hard to find a Caesar’s wife.”