Regulation

Could a CFO Run the Bank of England?

The race has officially started to become the next governor of the Bank of England, and some former CFOs, though long shots, are among the hopefuls.
Andrew SawersSeptember 25, 2012

For years it’s been known that Bank of England Governor Sir Mervyn King would be stepping down in June 2013 at the expiry of his second five-year term. In mid-September, The Economist magazine finally carried the formal job ad for the much-coveted role – one that currently pays £305,000 ($494,175) and comes with the full glare of the international spotlight. The race for one of the hottest central bank jobs in the world is now officially on – and no fewer than four former finance executives (including three ex-CFOs) are said to be in the running. Here are the possible candidates and their odds of success, as listed by William Hill, a British betting firm.

7-to-4 favorite – Paul Tucker
Tucker has been with the Bank of England for about 23 years, rising in March 2009 to the position of deputy governor with responsibility for financial stability. Heir-apparent to the governor’s job, Tucker somewhat blotted his copybook for having failed to spot the Libor-rigging scandal when it was right under his nose. “This doesn’t look good, Mr Tucker,” said Andrew Tyrie, chair of the parliamentary committee investigating the affair. Neither were Tucker’s chances of promotion helped when emails were published that suggested a too-cozy friendship with now-discredited Barclays CEO Bob Diamond. On being congratulated on his promotion to deputy governor, Tucker replied, “Thanks so much Bob. You’ve been an absolute brick through this.”

5-to-2 – Mark Carney
Amazingly, the bookies’ second-favorite candidate is a man who has emphatically ruled himself out of the running: Bank of Canada Governor Mark Carney, one of very few central bankers who has weathered the financial crisis well. The highly respected ex-Goldman Sachs banker from Canada’s Northwest Territories has a master’s degree and a doctorate from Oxford University, and joined the central bank in 2003. He was appointed governor in February 2008 for a term that doesn’t expire until 2015. He insisted “No, never” when asked if he would leave that role early to take up the Bank of England job.

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3-to-1 – Adair Turner
Currently the executive chairman of the Financial Services Authority, the U.K. regulator, Turner (known as Lord Turner since he was appointed in 2005 to the upper chamber of parliament) is a former McKinsey consultant. He has also been director-general of the Confederation of British Industry, an employers’ organization. He took up his role at the FSA in September 2008, the same month Lehman Brothers collapsed, so has managed to avoid criticism leveled at the regulator for its pre-crisis failings. He recently told Bloomberg that the next Bank of England governor should not be a “God-like” figure, a not-at-all veiled criticism of the governance of the bank under Sir Mervyn King. Turner’s candidacy could be helped by the fact that the FSA will be split into two separate components next year, one of which will be subsumed by the Bank of England.

5-to-1 – Gus O’Donnell
Properly known as Lord O’Donnell, he is cheekily referred to as GOD because of his initials. He is the former cabinet secretary, the head of the civil service, and the most important unelected official in government circles. His background in the Treasury as well as stints with the International Monetary Fund and the World Bank would stand in his favor. In the summer he was in the running for the chairmanship of Barclays after the departure of Marcus Agius and CEO Diamond. He lost out to former Bank of England executive David Walker, but the process looks like it might have been an early dry run for the bigger role.

10-to-1 – Sir John Vickers
A former chief economist at the Bank of England, Sir John Vickers headed the team responsible for a report on the U.K. banking system that recommended “ringfencing” retail activities to keep them from being harmed by banks’ wholesale and derivatives operations. The government will likely go for a more watered-down version of his suggestions, while the report inquiry process raised Vickers’ profile with an industry he might soon have to regulate. He is also the former head of the Office of Fair Trading, a competition and consumer protection agency, though as an Oxford professor he may be regarded as too academically minded.

10-to-1 – Stephen Green
Lord Green’s career at HSBC spanned more than a quarter of a century, taking him into the bank’s treasury operations, and ultimately to the chief executive role and then the chairmanship. He left the bank in 2010 to become a trade minister in the coalition government. Apart from the respect he commanded at HSBC, his ethical credentials for the role are reinforced by the fact that he is an ordained priest in the Church of England and author of the book, Serving God? Serving Mammon? His chances may have been diminished by the recent U.S. investigation into HSBC money laundering in Mexico.

14-to-1 – John Varley
Trained as a lawyer, Varley spent most of his career with Barclays, serving as CFO between 2000 and 2003, becoming deputy chief executive then chief executive the following year. He left in 2010 with his reputation in good form, making way for Bob Diamond – a circumstance that won’t have done him any favors if he’s running for the governorship.

20-to-1 – Douglas Flint
The Scottish, one-time KPMG partner became CFO of HSBC in 1995, earning a solid reputation as someone who prudently manages a huge balance sheet one pound at a time. Highly respected, he was appointed chairman of the bank in 2010 when Green left to join the government.

20-to-1 – Kate Barker
Barker is the only woman in the list of potential candidates. She is a career economist, but one grounded in the real world rather than academia. She served 10 years as chief economist with Ford in the U.K. and then seven years with the Confederation of British Industry. Between 2001 and 2010 she was on the Bank of England’s Monetary Policy Committee, which sets interest rates and determines the level of quantitative easing.

20-to-1 – Peter Sands
Like Adair Turner, Sands is another ex-McKinsey consultant. He was recruited by Standard Chartered as CFO in 2002, rising to chief executive four years later. The global financial crisis almost entirely bypassed Standard Chartered, which would have served Sands very well indeed if he’d considered applying for the governorship. The recent $340 million settlement with a New York regulator over allegations – strenuously denied – of sanctions-busting in the bank’s dealings with Iran will have all but scuppered his chances.

33-to-1 – Steve Hawkes
Hawkes is the business editor of British tabloid newspaper The Sun, owned by Rupert Murdoch’s News Corporation. In what might politely be referred to as a stunt, Hawkes has secured an official endorsement from Mervyn King – no, not the current governor, but a professional darts player of the same name.

Andrew Sawers is editor of CFO European Briefing, a CFO online publication.

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