THE ODDEST aspect of Sir Andrew Large’s appointment as a deputy governor of the Bank of England last week is that his name was never mentioned in dozens of reports speculating on runners and riders. Yet he should not have been overlooked. Large’s curriculum vitae made him an obvious guardian of the nation’s financial system. But as some who are not unhappy at seeing him go as deputy chairman of Barclays Bank know only too well, the velvet glove can contain an iron fist.
Sir Gordon Downey, chairman of the Personal Investment Authority (PIA), felt that fist when Large was chairman of the Securities & Investments Board (SIB), the UK’s main financial regulator, a decade ago. Large made it plain he was unhappy with the progress in establishing the PIA. He fell out with the big banks and the Prudential which were refusing to join - and he fell out with Downey, a former auditor-general, but it was Downey who departed.
Large had been recruited to the SIB in 1992 with a brief to tighten the regulatory regime after Robert Maxwell had plundered his companies’ pension funds. When the head of the satellite monitoring Maxwell wrote to a select committee of MPs saying the SIB’s role was "untenable", Large’s iron fist reached for the phone and the witness said he now felt unable to expand in oral evidence for fear of losing his job.
The MPs considered charging Large with breach of parliamentary privilege for his intervention - but ministers liked his tough approach and were keen to keep him.
As a boy Large travelled the world with his major-general father, a Scottish army doctor, and he continued travelling in his first job with BP: the oil group put him in marketing, sent him to Malaysia and then to Insead, the French business school.
But at 29, he left to become an investment banker. For nine years he ran Orion, one of the newly-fashionable consortium banks specialising in syndicated loans, then he spent eight years at Swiss Bank Corporation, becoming chief executive and the only non-Swiss on the executive board.
With that came a seat on the council of the London Stock Exchange during the excitement of Big Bang, a place on the Takeovers Panel and chairmanship of The Securities Association, the fledgling regulator overseeing stockbrokers.
In the early 1990s he moved to Wales, planning to walk the hills while running his own advisory company and picking up directorships at Nuclear Electric, Rank Hovis McDougall, Dowty, English China Clays and Phoenix Securities, the adviser behind most of the City’s Big Bang mergers.
Trade minister Peter Lilley and then Bank of England governor Robin Leigh-Pemberton had other ideas. Confidence in financial regulation had collapsed: not only had Maxwell and his money gone missing, but BCCI and Barings had gone bust. They decided that Large was the man to clean up the City as SIB chairman. Rather than conduct the Maxwell witch-hunt that ministers demanded, Large set about reforming the SIB, squeezing five satellite regulators into three, seconding professional bankers and combining lighter regulation with stricter disclosure and tougher penalties.
Large also set about tackling market abuse, attacked the star system of City analysts and their bonuses, delivered an early warning on the dangers of the internet - and created the offence of mis-selling. When he started investigating pension policy sales, the mis-selling bill was estimated at 500m: now, with endowment policies included and after fines of several millions of pounds, it exceeds 10bn.
Large’s only regret at opening this Pandora’s box was that it remained unfinished business when he resigned from regulation in 1997. Incoming Chancellor Gordon Brown and Sir Edward George, the Bank governor, expressed regret, but the Chancellor wanted to expand the regulator’s role.
Large’s post-Maxwell review had recommended retaining the two-tier system of SIB and its satellites, he backed self-regulation, and rejected calls for a body to prosecute insider-dealers. Brown wanted exactly the opposite and, unlike the Tories, was prepared to legislate for it.
Howard Davies was recruited from the Bank of England to create a new Financial Services Authority and, though Large had previously said a single enforcement agency such as the US Securities & Exchange Commission would be too expensive and unwieldy, he gave it his blessing.
Knighted for his public service, Large surveyed the private sector. Despite speculation that he would surface at NatWest or the International Petroleum Exchange, it was Barclays that made him deputy chairman under his Winchester schoolmate, Andrew Buxton.
Large wanted to be chairman of Barclays Capital, the residue of the investment banking division. The bank’s chief executive, Martin Taylor, blocked the move, leaving Large long on time and short on work - a dangerous combination. Large put his nose into other peoples’ business and Taylor’s out of joint. Taylor wanted to demerge the bank, Large believes in size and opposed him. Within months, Taylor asked Buxton to get rid of Large: instead, Large got rid of Taylor.
When it was proposed that Large take Taylor’s job and later become chairman, the executives rebelled. Large was turned from a four-day-a-week executive into a two-day non-executive without an office - though this has crept back to three.
Last month Large turned 60 - the official retirement age at the Bank of England. The Chancellor nevertheless plucked him from Barclays to take the deputy-governor’s job. Sitting on the Board of Banking Supervision in his SIB days has already given him a taste of Bank life, and with a stint on the Lloyd’s of London regulatory board and the chairmanship of the Euroclear share settlement agency, the CV had grown again to give Brown the candidate he was seeking.
It is less obvious what is in it for Large. His 207,000 pay is more than the 175,000 he received part-time at Barclays, but less than the 299,000 he was paid by the SIB more than five years ago. There can be no lucrative non-executive directorships during his five years at the Bank. He is too old even to join the pension scheme.
Being deputy governor is a full-time job that not only gives Large responsibility for financial stability but also involves running the Bank - a business with 2,000 staff, a printing subsidiary and a 221m annual budget. There is also an automatic seat on the FSA board.
George retires as governor next June, and his other deputy, Mervyn King, only 54, is regarded as a shoo-in. But with his greater all-round experience, perhaps there is a chance of a challenge for Large after all. King should watch out for the velvet glove.