The Financial Services Authority promised yesterday to inc-rease the resources it devotes to policing the banking sector, as the Chancellor of the Exchequer, Alistair Darling, unveiled his proposals for regulatory reform to MPs on the Treasury Select Committee.
The UK's chief City regulator has promoted Sally Dewar, until now its director of markets, to the role of managing director of wholesale firms. Ms Dewar will work closely with Thomas Huertas, acting head of the wholesale division, who is to move to a new role heading the team responsible for the banking sector. Both will report directly to Hector Sants, the FSA's chief executive.
The reorganisation reflects criticism levelled at the FSA over its part in the failure to prevent the Northern Rock scandal. Yesterday, Mr Darling told MPs he would bring forward proposals for reform of the current tri-partite system of regulation of banks, including additional powers for the FSA, at the end of the month.
Mr Darling also gave MPs his starkest warning yet that the Treasury may be forced to nationalise Northern Rock. Mr Darling admitted that it "may not be possible" to find a private buyer for the institution.
The Treasury indicated last night that it would have no objection to sovereign wealth funds from the Middle East or China in a company becoming involved in a rescue of Northern Rock, reflecting increasing concern about the viability of a private-sector rescue of the bank.
Despite an improvement in credit markets in the new year, there has been increasing speculation that neither Sir Richard Branson's Virgin Group nor Luqman Arnold's Olivant consortium, which have placed competing bids to take over the bank, will be able to arrange all the funding they require.
Mr Darling also warned shareholders, who will meet at a Northern Rock extraordinary general meeting next week, that they are not his priority.Reuse content