Mervyn Davies has resigned as chairman of Standard Chartered Bank after being wooed by Gordon Brown and persuaded to join the Government as Trade minister.
He has been made a life peer and will sit on Mr Brown's "war cabinet", the National Economic Council. Although he will be involved in the Government's continuing efforts to nurse the banks back to full health, Downing Street said his primary responsibility would be trade rather than banking.
Unlike his predecessor, Lord Jones of Birmingham (the former CBI director-general Digby Jones), Lord Davies will join Labour and take the party whip. He will be unpaid as a minister. Lord Mandelson, his boss as Business Secretary, said the Government would value his banking experience in helping to deal with the current crisis, as well as promoting trade and investment.
But the move came under fire from Tory and Labour members of the Commons business select committee because four of the seven ministers in the Department for Business, Enter-prise and Regulatory Reform (DBERR) are peers appointed by Mr Brown and cannot be questioned regularly by MPs. The others are Baroness Vadera and Lord Carter, both former Brown aides.
Only one DBERR minister, Pat McFadden, works full-time in department and has a Commons seat. The Labour MP Lindsay Hoyle asked if there could be another full-time minister based in the Commons "just to get a bit of balance back", in the interests of accountability and scrutiny. Peter Luff, the committee's Tory chairman, added: "The Prime Minister certainly likes using appointments to the House of Lords, doesn't he?"
Lord Mandelson replied: "He [Mr Brown] likes getting the best person in harness to serve the country and I think that all these ministers are doing precisely that – but not to the exclusion of the Commons."
At one point, ministers hoped that Lord Davies, a key player in last autumn's bank bailout, would become chairman at Royal Bank of Scotland, which is now majority-owned by the Government.
But Lord Davies, who heads the Prime Minister's Business Council for Britain, opted for a wider government role even though he has to give up his business interests. He has told friends that he is making the move because he sees it as his "public service".
Mr Brown's official spokesman said: "Mervyn Davies is clearly somebody who has a huge amount of international business experience as chairman of Standard Chartered, a genuinely global bank, so he does bring a huge amount of expertise and knowledge of not only the international financial world but the international business world as well."