Sir John Parker to quit Bank of England Court

Top industrialist Sir John Parker will not re-apply to be chairman of the Court of the Bank of England when he, along with the 15 other non-executive directors, have to resign next year in one of the biggest shake-ups of the institution.

Sir John, the senior independent director on the Court, has decided against standing when the Bank's 16 directors are asked to give up their jobs as the new Banking Bill becomes law early next year. At 65, Sir John, who is also chairman of National Grid, vice-chairman of DP World and joint chairman of Mondi, is understood to feel that it is time to stand aside after a tumultuous year but also to bring fresh blood on to the Court.

Sources say Sir John and the Governor, Mervyn King, have an extremely close relationship and there are no suggestions that there is any disagreement between the two. "They get on really well, talk all the time about what is happening, even on Sundays," said one source. Sir John is said to have been instrumental in smoothing relations between the Bank and the Government.

The new Bill, which has just had its second reading, is being introduced to give the Bank new powers over ailing banks, statutory responsibility for financial stability and requires that the Court be cut down to create a more modern board. All 16 directors will be invited to re-apply for their positions but the Court will be cut to between five and eight non-executives. The new Court will consist of 12 members in all. Four of these will be Mr King, his two deputies, Sir John Gieve and Charles Bean, and Lord Adair, the head of the Financial Services Authority.

The Court, which meets monthly, manages the Bank's affairs other than monetary policy. Over the past year it has been closely involved with helping steer policy towards the economy. But it has been criticised for its size and the quality of the directors, with some claiming they lack financial nous. The Bank is setting up a new Financial Stability Committee, along the lines of the Monetary Policy Committee.

Sir John Gieve is also leaving next year and head-hunters are searching for his replacement. One of the favourites to take over is Paul Tucker, the Bank's director of markets.