Chris Thompson, a senior executive in the banking supervisory hierarchy at the Bank of England, stepped down discreetly last week after reading sharp criticism of his handling of relations with Barings in the official report on the merchant bank's collapse.
The full 500-page is due to be presented to Parliament tomorrow. It has criticised Bank executives for failing to spot flaws in Barings' controls over its international securities trading operations, and for tardiness and lack of clarity in responding to requests for guidance on financing derivatives dealing.
Alistair Darling, Labour's City spokesman, said: "As in the case of BCCI and Johnson Matthey before it, the top management at the Bank of England has to take responsibility. The resignation of one individual is certainly not the end of the story. The most important thing is to find out what went wrong at the highest levels of supervision. This is the third time in a decade that there has been a failure of supervision and there must be lessons to be learned."
Concern has been expressed that Mr Thompson, who is believed to be of pensionable age, may be a scapegoat for more widespread supervisory weakness at the Bank of England. Mr Thompson reported to Carol Sergeant, who is in charge of the large UK banking supervisory division. Ms Sergeant reports to the deputy head of supervision, Michael Foot, who reports to the executive director, Brian Quinn.
The 500-page report directly blames the collapse of Barings under nearly pounds 900m of derivatives losses on the trading of Nick Leeson, the former Singapore dealer, and on gross inadequacies in Barings' risk control arrangements, as well as negligence by a number of senior former Barings' executives.
The criticism of the Bank of England is believed to focus on its relations with its supervisory charge. Evidence from Barings' executives given to the official inquiry contained strong criticism of the Bank's apparent lack of expertise in dealing with institutions involved in the full complex of global securities trading. In particular there was criticism that Bank officials took, on one notable occasion, more than a year to give guidance on specific questions. Sources suggest that this particular reference prompted Mr Thompson's departure.
The Bank of England yesterday maintained its silence on the resignation, saying it preferred to withhold comment until the full report is out.