Sir John Vickers yesterday warned that ring-fenced retail banks' boards would require a complete overhaul to meet the demands of his banking reforms.
Appearing before the House of Lords' Economic Affairs Committee, Sir John said his Independent Commission on Banking (ICB) did not consult headhunters on a requirement for ring-fenced retail banks to have their own boards of non-executive directors. He added: "It may be that the role of non-executive in that sector needs to be transformed... In fact I'd say it clearly does. The entire relationship between institutions and the non-execs may need to be on an entirely different footing."
In its final report, the ICB said banks' retail arms need to have their own boards to safeguard customers' deposits against risks from investment banking. Critics have questioned whether there will be enough suitable candidates to oversee multiple retail banks. The call for separate, revamped boards promises a payday for recruiters and business coaches.
Non-executive directors at Royal Bank of Scotland and HBOS came in for severe criticism for letting management take near-fatal risks.
Training and standards for non-executives have already been overhauled following recommendations on governance made by Sir David Walker in 2009.
Lord Lawson, the former Chancellor of the Exchequer, told Sir John he was "baffled" by the decision to allow the different cultures of retail and investment banking to cohabit in the same bank.
Sir John said the separate retail banking board would be "very conducive" to addressing Lord Lawson's point.Reuse content