'Old Lady' should quit Threadneedle in cultural shake up, says Lord Myners

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The next Bank of England Governor, Mark Carney, should consider moving the Bank out of its Threadneedle Street headquarters in a major cultural shakeup at the 318 year-old lender, former City Minister Paul Myners has said.

The building’s hushed halls, warren-like corridors and formal cabinet-style meeting rooms reinforce narrow thinking, rigid hierarchy and an over-deference to senior figures that is incompatible with a dynamic central bank.

"Carney’s big challenge will be the culture of the Bank," Lord Myners said.

"Huge ceilings, marbled floors and pillars, men walking around in their pink frock coats: Threadneedle Street supports compartmentalised thinking and a sense of hierarchy. I wouldn’t rule out the idea of moving out of the Bank of England building entirely."

The Bank of England has been in Threadneedle Street since 1734.

Myners knows it well, having served on the Bank’s non-executive board – the Court – for four years, before working with Governor Mervyn King on the rescue of Britain’s banking sector from 2008 when he was appointed Financial Services Secretary.

"The deference and total respect for authority there is extraordinary, from the deputy governor down. I often heard it said the Governor ruled the City with the raising of an eyebrow but some of the deputy governors also had very active eyebrows."

That environment has contributed to an organisation inherently uncomfortable at making quick decisions, he said. At the height of the crisis the Bank abandoned its old ways (after criticism over its initial response) and acted decisively. The Bank now needed to repeat that as a matter of routine said Myners, especially as it took on the FSA’s bank oversight duties.

City Minister Paul Myners
Carney might find the Bank of England "quite a shock" when he succeeds Mervyn King next July after only leaving the Bank of Canada one month earlier, said Myners. He will have to chair the monetary and financial policy committees and the Prudential Regulatory Authority, represent Britain on the European Stability Board (of which he is chairman) and act as one of Britain’s two representatives to ECOFIN, the IMF and the World Bank. He will also have to integrate the Prudential Regulation Authority, the banking supervision wing of the FSA, into the Bank of England next year.

"It’s just too much for one person" said Myners. "The government need to revisit the idea of putting more responsibility in the hands of the deputy governors."

Confidence trick

The task of shaking up the British economy will be more difficult. Myners said what Britain needed above all was a shot of confidence for companies and consumers, not more credit from banks or via the Bank of England’s quantitative easing programme. He urged Chancellor George Osborne to take the lead.

“It’s about language. It’s convincing people that this government will take whatever action is necessary. I think some of the language he used early in his time as chancellor was the language of opposition in talking about the country on the “brink of bankruptcy”. That was wrong and is certainly not right way to express yourself when you are chancellor.”

"I actually think that the UK banks have been extremely supportive of the needs of British business. The real problem is one of too little demand rather than limited supply."

British banks, he said, were some of the best capitalised in the world despite the Bank’s latest Financial Stability Report which suggested that greater provisions were required to avoid inadequately capitalised banks holding back the UK’s recovery.

Lord Myners was speaking ahead of an RBS Insight event with clients. 

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The statements and opinions expressed in this article are solely the views of Lord Myners speaking at an RBS Insight event on 4 December 2012 and do not necessarily represent the views of the Royal Bank of Scotland.

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