AS A Bank of England lifer, Paul Tucker will sorely miss the Old Lady when he leaves in the autumn. But will the bank miss him?
Tucker, one of three deputy governors, was said to have stunned a meeting of bank bosses – who included outgoing Royal Bank of Scotland chief executive Stephen Hester – when he announced his decision on Friday.
If his departure was seismic enough it came in the week that Hester’s exit was also confirmed and added to a growing sense that the Chancellor, George Osborne, was tightening his grip on the banking sector.
Canadian Mark Carney will take over as governor of the Bank of England next month and the removal of Tucker appears to be part of a move to clear the decks to allow the new man some room.
He has chalked up 33 years at the Bank and has been a huge influence on policy, but his departure is not a surprise, particularly after he was passed over for the top job. He was criticised for missing the Libor scandal and his opposition to greater monetary stimulus pitched him against his boss. His removal will pave the way for Carney to step up the programme.
His successor is likely to be internal. Among the candidates is Andy Haldane, head of financial stability and a rising star who was an outsider for King’s job.
Bankers’ pay must be tackled
The speculation will stop this week and the Parliamentary Commission on Banking Standards will deliver its final report.
There has been a lot of talk about bank splits and tougher rules on bankers’ pay and it is expected to address both, though with some leeway for the government to pick and choose a route forward.
One such option will be to split the Royal Bank of Scotland into a good bank and bad bank, effectively parcelling up the toxic loans into the bad bit and creating a clean bank that can get on with the day job.
However, this is likely to be rejected by the Chancellor who has been persuaded that it will be time consuming and costly. He would have to buy up the remaining shares at a cost of some £10 billion and delay plans to privatise the bank.
He is tired of legacy issues from the banking crisis and just wants to put it behind him. This week he will unveil the first steps in that process by announcing a sale of shares in Lloyds.
A more popular recommendation from the Commission will be to link pay more closely with performance.
The issue of bankers’ pay has been a thorny one and with only grudging concessions from the industry in the wake of public outrage it is time for firm action to ensure no one gets rich for messing up.
Winner takes all in price war
THE promise of a price war between BT and BSkyB has begun. BT threw down the gauntlet last month by offering sports channels free to households that subscribe to its broadband service from August.
Sky has retaliated by giving new sports television customers a year’s free broadband. There are other offers for new customers.
The battle is now likely to intensify as the football season progresses, with BT desperate to gain the sort of foothold that largely escaped others such as ESPN and Setanta which tried to tackle Sky’s dominance of the pay-TV market.
Customers should be the winners with prices being slashed, though the market could eventually be settled by die-hard sports families opting for Sky while the single viewer opts for BT. But there is a lot at stake in what could yet prove to be a winner-takes-all contest.
Worrying times for O’Toole
THERE are a few more worrying days ahead for FirstGroup boss Tim O’Toole as the company prepares to announce the result of its £615 million fund-raising exercise.
Its shares plunged to a record low on Friday amid concerns that investors have shunned the rights issue, leaving the underwriters to pick up the tab.
The price fell to 93.7p, just above the 85p rights price and is now half where it stood when the company announced the issue which it will use to help pay down a £2 billion debt pile.
The result of the issue will be announced on 26 June.