Bank chief to stand down

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The deputy Governor of the Bank of England Sir John Gieve is to stand down from the post early, it emerged tonight.

Sources said Sir John, who has been in the role at the Bank since January 2006, will make the announcement tomorrow.

Last year, MPs savaged his handling of the Northern Rock crisis, with the head of the powerful Treasury Select Committee accusing him of failing to do his job.

Sir John was due to serve as deputy governor until January 2011.

Word of his resignation came as Chancellor Alistair Darling announced plans to overhaul regulation of the financial services, giving the Bank of England a new legal responsibility for financial stability.

In a statement released after the news broke, the Bank of England said: "Sir John Gieve has decided he will leave the Bank next year once changes to the Bank's responsibilities have been made, including a new Special Resolution Regime for failing banks.

"Sir John believes the Bank's new responsibilities should be led by a new Deputy Governor who will serve a full term.

Mervyn King, governor of the Bank of England, said: "I am grateful to John for his hard work and loyalty.

"In particular since the events of last summer, John has played a major role in delivering the new framework.

"I can understand why he does not want to assume the new position, but I am very glad he is staying on to see us through until the bill is law."

Sir John said: "In recent months I have been leading work in the Bank on a new and better framework for financial stability. I fully support the new proposals and, in particular, the enhanced role for the Bank of England.

Sir John came into fierce criticism last September from the Treasury Select Committee over the Northern Rock fiasco.

In a stinging attack during a parliamentary evidence session, John McFall, chair of the committee, told Sir John: "Frankly, I do not think you are doing your job".

He said the deputy governor should have been aware much earlier of the Northern Rock situation, accusing him of being "pretty laid back".

Mr McFall added: "People were talking about Northern Rock, they were talking to me about Northern Rock, others were talking about Northern Rock so I think it's absurd that you should come here and say you didn't know anything about it - you are the guy in charge of financial stability," he said.

Among those being rumoured to replace Sir John is Charles Bean, currently the Bank of England's chief economist.