They will help improve "damaging" low levels of experience in the supervision department, identified in a report by the consultants Arthur Andersen, which recommends there should be a widespread cultural change.
The expansion is part of a wide-ranging re-organisation and beefing up of supervision announced yesterday after a nine-month review of the operation of the department, prompted by the Barings collapse and the subsequent inquiries.
Howard Davies, deputy governor, who was in charge of the review, said the sort of banker he was thinking of recruiting as a grey panther - a name he suggested himself - was Richard Delbridge, who retired last year from HSBC. Mr Delbridge helped the Bank with its supervision review. "We have not recruited him, but we have a little list," Mr Davies added.
The older recruits would be full- or part-time with wide general experience as well as specialist knowledge in areas such as credit and market risk.
Arthur Andersen found the Bank supervisors' average age was 30 compared with 40 in their overseas equivalents and 37 at other UK regulators. The accountants said 55 per cent of line supervisors had less than three years in their jobs.
The firm, whose report for the Bank was published with the results of the review, expressed concern at this state of affairs, given that UK bank supervision required "greater levels of judgement than many other supervisory regimes".
New entrants often move to other parts of the Bank within two to three years but only a few return to supervision from elsewhere in the bank at senior levels. "The resulting lack of experience is damaging," Arthur Andersen said.
The grey panthers are only one part of a programme to raise experience levels and morale, increase staff numbers, improve training and career progression and use more secondments. There will be no big increase in salaries but bands will be widened to allow more progressive pay rises. Salaries in the private sector are twice those in the Bank.
Arthur Andersen found poor morale in the department after the BCCI and Barings collapses, which heightened supervisors' concerns about making mistakes, and "negative aspects of the culture including excessive and unnecessary copying of documents and some feeling that a period working [in the department] does not necessarily further your career in the Bank."
The report also found senior managers to be overstretched and not delegating enough decisions, so the department is to be sub-divided further with three new divisions with senior heads. However, the report was also complimentary about the Bank's high standing among international regulators, who saw it as a leader in the field, and added that other systems had a worse history of bank failures.
Arthur Andersen recommended the Bank raise total staffing in the department by precisely 101 to 486 after two to three years, but Mr Davies said the final total could be more or less than this. There would be a definite increase of 45 among specialists but the exact total of line supervisors to be hired as well would not be clear until changes in working methods began to be implemented.
These include a shift towards new methods of supervision that identify the risk profile of individual banks using a standardised method, and the drawing up of specially tailored plans to deal with the institution.
There will be moves to get more supervisors out of their offices to meet and get to know the banks they cover.
Mr Davies said: "Banks will still fail - we can't stop that happening nor should we pretend to do so." But the Bank of England would be at the leading edge of best practice.
The British Bankers Association welcomed the changes. The cost of the plans will be an extra pounds 7m-pounds 8m a year when the reorganisation is complete.Reuse content