Jason Nissé: Cheer up, Kevin Keegan - Sir Howard has his eyes on a different City job

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The Independent Online

Sir Howard Davies supports Manchester City. So he knows a thing or two about disappointment.

But this week he will be celebrating. The Financial Services Authority – the giant regulator he crafted from a gaggle of watchdogs so at odds that they made the Northern Alliance seem unified – will finally get its powers. N2, as it is termed, occurs at midnight on Friday.

And although it will not be as heralded as Big Bang in 1986, it is perhaps more significant for the City. For while there have been all sorts of moans about the cost of regulation and the burden it puts on senior executives at financial institutions, if it creates a stable, well-policed market then London will not only remain the financial centre of Europe, it will suck even more of the business from Frankfurt, Paris and Amsterdam. If you need evidence of how far ahead the City is, you need only note that at the same time as the French-run Euronext is paying over the odds for Liffe, so that the London futures exchange can manage its operations, Liffe's German rival, Eurex, was completely wrong-footed by one rogue trade.

Sir Howard is perceived as a success. But what next? When I interviewed him a few months ago, he said he would not consider his future until after N2. His current five-year tenure at the FSA runs until next June. But if he is going to leave, then the Treasury ought to start thinking about his replacement once our New Year's hangovers have gone.

But will he go? I would say it is Sir Howard's decision. Gordon Brown would be taking a great risk to force him out; Sir Howard is not backward about making his feelings felt.

However, the educated guess is that he will want to go. The job, though big, will become less exciting as things bed down at the FSA. Although Sir Howard has had to deal with the Equitable Life and Independent Insurance disasters in the past year, he can genuinely say that they were not his fault – both suffered from an imperfect regulatory regime for insurance, which he is reforming. If anything major goes wrong in a couple of years' time then the mud will be thrown at Sir Howard and could stick.

But where will he go? He is not really a private sector man: he started life as a civil servant and, despite a couple of years in management consultants, is a public sector boy.

There are a few big jobs around, but Sir Howard's one overriding ambition is to be Governor of the Bank of England.

Can Gordon risk giving him the job? The timing is not bad. Sir Howard might have to wait for a little while before Sir Eddie George retires, but not a massive amount of time. The bigger problems are, first, that there are two candidates already in Mervyn King and David Clementi, and second, that Sir Howard is far more pro-euro than Sir Eddie and indeed the Chancellor of the Exchequer. Mr Brown's supposed conversion to the euro will have to stick for the relationship to work.

The word from the Treasury is that the future of Sir Howard has yet to be discussed with the brooding presence. Mr Brown is too busy running Britain, while Tony Blair is playing Churchill (and hoping that he soon gets to take over the reins for good) to be bothered by this at the moment. But he will have to turn his great intellect to the issue shortly.

Unlike Manchester City under its high-profile manager Kevin Keegan, Sir Howard has tasted success and is hungry for more.

Chrysalis isn't worth a flutter

It's that time again. Every six months Chrysalis reports its figures, and while we hold our breath for a profit, our dreams are almost always dashed. The figures for the year to 30 September show a pre-tax loss of £16.8m. This follows £22.4m lost in the group's internet arm. Only two years ago Chrysalis raised £26.8m in the City to invest in this business – and now it has "done" almost all the cash. The group is valued at nearly £400m. Some of that is due to its excellent radio stations, but a lot of it is hope. Alas, I can't see it triumphing over reality.