LONDON: Britain’s new government named Andrew Bailey as the Bank of England’s next boss on Friday, entrusting a veteran regulator and technocrat with steering the economy and its vast finance industry through Brexit.
During a 30-year stint at the BoE, Bailey helped shore up the banking system against the global financial crisis. Since 2016 he has led the industry’s watchdog, the Financial Conduct Authority.
Finance minister Sajid Javid called him “the stand-out candidate” as Britain maps out its future outside the EU, and he hailed Bailey’s role in quelling the 2008-09 crisis.
“It is a tribute to his integrity and his character that he emerged from that… with his reputation enhanced in Whitehall, in the City of London and in financial capitals,” Javid said.
Bailey, who has sought to present a neutral stance on Brexit, said he was honoured to succeed Mark Carney “particularly at such a critical time for the nation as we leave the European Union.”
Britain had delayed the appointment since 2018 as it focused on its tortuous EU departure and on an election emphatically won last week by Prime Minister Boris Johnson.
Bailey was an early front-runner for the job but as the announcement was pushed back, his chances seemed to have dimmed, with his critics accusing him of pulling his punches at the FCA.
Supporters say he knows how to use the BoE’s sweeping powers without alienating bankers, and his financial crisis role makes him familiar to top officials at other major central banks.
“When he was in the room you were confident you had someone who was worth listening to and, importantly, also had the solution to what the problem might be,” a former official involved in the crisis said, speaking on condition of anonymity.
The 60-year-old will serve an eight-year term starting on March 16. Carney has delayed his scheduled Jan. 31 departure until then.
STEADY, OR SLOW?
Bailey beat other candidates recently seen as more likely to get the BoE’s top job – and its 495,000 pounds a year – including another former deputy governor, Minouche Shafik, who now heads the London School of Economics.
The Financial Times said Johnson rejected Shafik because of her critical views on Brexit.
Bailey is viewed as pro-European but routinely starts his speeches by saying the FCA takes no position on Brexit. He has also said Britain, home to Europe’s largest financial centre, must not become a “taker” of EU rules after it leaves the bloc.
Bailey “should be an appointment that is above the political fray… a good choice, a steady choice,” said Nomura economist George Buckley.
Bailey’s ousted FCA predecessor Martin Wheatley had a reputation for plain speaking, leading to suggestions that then finance minister George Osborne forced him out to appoint someone less confrontational.
On Bailey’s watch, the FCA last year fined Jes Staley, chief executive of Barclays, 1.1 million pounds ($1.43 million) after he tried to identify a whistleblower. Lawmakers said the penalty was too lenient.
Bailey has also been criticised for not publishing in full a report into alleged misconduct by another British bank, RBS. He cited privacy restrictions.
His chances of getting the BoE job were seen to have been further dented with the suspension of the Woodford equity fund, popular with retail clients who now face large losses.
Prominent anti-Brexit campaigner Gina Miller, who works for wealth management firm SCM Direct, accused Bailey of being too slow to stop the rot at Woodford.
“If you look at all the things on his watch, the culture has been to do things at the very last minute,” she said.
Bailey has said the FCA’s actions were limited by EU rules.
Born in the central English city of Leicester, his father was a school headmaster and his mother a magistrate “so it’s no surprise I ended up like this,” he told the Sunday Times in 2016, laughing at his low-key style which stands in contrast to the high-profile approach of Carney.
“Andrew Bailey doesn’t immediately make one think of Che Guevara,” Sam Woods, a BoE deputy governor, said in 2016. “But Andrew has been right at the forefront of the revolution in prudential regulation.”
Opposition Labour Party finance head John McDonnell called Bailey “an establishment figure with what some consider is a less than inspiring record” and said he would have to show quickly he could tackle Britain’s economic problems.
Bailey helped the BoE contain fallout from the 1995 collapse of investment bank Barings and was private secretary to former governor Eddie George in the second half of the 1990s, when the BoE was given operational independence to set rates.
That experience should help Bailey counter questions about his lack of experience on monetary policy. He could also take advice from his American wife, Cheryl Schonhardt-Bailey, an author and editor of several books on monetary policy and trade.
Source: Economic Times