MPs grill Eddie George over Barings collapse

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Eddie George, Governor of the Bank of England, yesterday parried fierce criticisms from MPs during a two-hour grilling by the Commons Treasury select committee over the role of the Bank of England in the Barings affair.

However, Mr George did admit that there had been lapses by the bank in the run-up to the demise of Barings. And he conceded he could not guarantee he would not be back before the committee in a few years' time discussing another bank failure.

Mr George, though, countered the criticisms made by Diane Abbot and Brian Sedgemore, two Labour MPs, by claiming that the bank had increased its scrutiny of financial markets both at home and abroad since the collapse. He added that the matter had been dealt with fully by the Board of Banking Supervision report on Barings.

The bank's record was "extraordinarily good" compared with any other banking system in the world, said Mr George, who then listed the banking problems suffered in other countries, including France, Italy, Scandinavia, Japan and the US.

Supervision was an extremely difficult job, and the bank had to preside over 500 banks, a larger and more complicated task than almost any other supervisor, he said.

He then clashed with Mr Sedgemore MP (Labour, Hackney South and Shoreditch), who claimed the former head of supervision at the bank, Brian Quinn, had obtained a job at the Japanese bank Nomura partly on the strength of his contacts.

Mr Sedgemore said if any supervisory problems should arise at Nomura, Mr Quinn could just "have a chat with his friend Eddie" to sort it out.

"I find that offensive," Mr George replied.

And the Governor denied a suggestion from Ms Abbot, (Hackney North and Stoke Newington) that supervision at the Bank of England had been regarded as a "career backwater". "That's not how we've ever seen that," he said.

Asked by Barry Legge, Conservative, about the future of independent merchant banks in the City, Mr George said that the wave of recent bids would "not necessarily lead to a 100 per cent takeover of independent institutions".