Candidates line up at the Bank
Wednesday 22 March 1995
and JOHN WILLCOCK
The search began in the City and Westminster last night for a successor to Rupert Pennant-Rea, whose resignation as Deputy Governor yesterday shocked the Bank of England.
But the Bank's insistence last night that there was no immediate shortlist for the position suggests that there will be no repeat of the overnight scramble during which Mr Pennant-Rea was appointed.
He was given 24 hours in the summer of 1993 to decide whether to take the job. His appointment was imposed on the Bank by Downing Street.
Attention was focusing last night on two of the bank's executive directors as well-placed candidates to step into the breach.
They are Mervyn King, chief economist for the Bank, and Pen Kent, who is in charge of financial infrastructure at the Bank.
But senior banking executives said that the Prime Minister, who appoints the Deputy Governor after consultation with the Chancellor, may wish to plump for another outsider. A commercial banker has not been brought straight in as a deputy at the Bank since the 1940s.
Sources suggested that although the obvious candidates would be senior executive directors of the big high street and merchant banks, chartered accountants should not be ruled out.
One, Brandon Gough, has recently moved from the senior post at Britain's biggest accountancy firm, Coopers & Lybrand, to become deputy chairman of the troubled investment bank SG Warburg.
A more orthodox choice would be Martin Owen, head of NatWest Markets, NatWest Group's merchant banking division, who is still in his mid-40s.
An obvious commercial banking candidate would be Keith Whitson, chief executive of Midland Bank, now owned by HSBC.
Because he is only the head of a subsidiary he may be tempted by a move to the Bank that normally would not be sufficiently attractive for the heads of the other big clearing banks.
The finance directors of the commercial banks would also fit the job description. One such is Oliver Stocken, finance director of Barclays.
The chief executive of one big high street bank said: "Whoever is chosen, it is going to have to be somebody intelligent and tough to work alongside Eddie George, who is a strong personality. There is no point in having someone who will just be steam-rollered."
The balance of opinion was on the choice of an outsider for the job because of the need to be seen to maintain a counter-balance to Mr George's monetary specialisation and Bank background.
A former top official said: "I would have thought that they would need someone with serious managerial experience in a clearing bank or merchant bank, with experience of banking supervision from the other side. He could get into the big issues such as whether to separate the Bank's supervision role from monetary policy.
"It shouldn't be the chairman or chief executive of a clearer because it would be too small a job for them.
"Maybe it should be the deputy chief executive or the finance director, or the chief executive of a merchant bank."
Mr Pennant-Rea's departure in disgrace came as the Bank's role in the City and the economy has been challenged, with suggestions that it should be broken up, with supervision hived off into a separate agency.
The report on the Barings crisis is likely to give this project new impetus.
Top bankers are urging the Government to take its time and "get it right this time" by setting out a proper job description and trawling widely for the right candidate.
The Deputy Governor's role is a crucial one because he stands in for the Governor whenever he is away on overseas business, which is frequently the case.
It was Mr Pennant-Rea who was left to handle the first 24 hours of the Barings crisis as Mr George was on a skiing holiday. The Deputy Governor is also responsible for the internal management of the Bank.
Mr Pennant-Rea had been in the process of dividing the Bank into two sections, one dealing with monetary policy and the other with supervision. Completing this job will be one of the key tasks for his successor.
One top banker said: "For the sake of the Bank it would be a good idea to get someone with a power base of his own - a fresh mind. Eddie is a very, very strong character and he now has all the cards."
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