Reuters: Regulatory News: UPDATE 1-UK lawmakers express "serious concerns" over new BoE regulator

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UPDATE 1-UK lawmakers express "serious concerns" over new BoE regulator Jun 5th 2013, 15:26 Wed Jun 5, 2013 11:26am EDT * Appointee to BoE regulatory committee faces rare challenge * Furse criticised over Fortis's purchase of ABN AMRO unit * Furse still backed to sit on Financial Policy Committee By Rosalba O'Brien and David Milliken LONDON, June 5 (Reuters) - British legislators took the unusual step of expressing "serious concerns" about a new Bank of England financial regulator, after challenging her over her role on a bank board that oversaw a botched takeover deal. Lawmakers on parliament's Treasury Committee backed the naming of Clara Furse to the Financial Policy Committee (FPC), but said on Wednesday they had reservations after quizzing her about her role on the board of Belgian bank Fortis during its purchase of a stake in ABN AMRO in 2007. Fortis bought the Dutch operations of ABN AMRO as part of a shared deal with RBS and Santander at the cusp of the financial crisis. The costly acquisition went sour and led to Fortis being bailed out by the state. At a hearing on Tuesday, in which the Treasury Committee examined the appointment of Furse and two other new FPC members, Furse defended her role at Fortis, saying the ABN AMRO buy had been for a "high quality retail banking asset" which had hit funding problems once the meltdown in global markets began. "Fortis did not buy a bad bank, it bought a good bank, that is why I was happy to approve the transaction," she said. Furse added that the experience "sensitises me to all sorts of extreme risk in a way I think might be quite useful". EARLY WARNING The FPC was launched in 2011 as an early-warning system for spotting economic risks, plugging a supervisory gap highlighted by the 2007-2009 financial crisis. It has powers to make recommendations and direct commercial banks to hold more capital. The Treasury Committee, which holds non-binding confirmation hearings for new appointments to both the FPC and the central bank's longer running Monetary Policy Committee (MPC), said it "expressed serious concerns about the appointment of Dame Clara Furse". Those concerns related to her explanation of her role on the board of Fortis during the takeover and lessons learnt, as well as her awareness of the importance of asserting the FPC's independence, it said. Furse - who was also chief executive of the London Stock Exchange between 2001 and 2009 - and fellow FPC nominees Richard Sharp and Martin Taylor were named by British finance minister George Osborne, and lawmakers were keen to question them over how they would show their independence. The Treasury Committee has held confirmation hearings for the MPC since 1998, but has rarely spoken out strongly against nominated candidates and does not have the power to veto them. In 2000, it called on then-finance minister Gordon Brown to reconsider the appointment of economist Christopher Allsopp after saying his responses at the hearing cast doubt on his skills. However, Allsopp went on to join the MPC. On Wednesday the committee said that despite its reservations, it concluded that Furse "has the professional competence and personal independence to be an external member of the Financial Policy Committee". It also approved the two other nominees, former Barclays chief Taylor and former Goldman Sachs executive Sharp. Link this Share this Digg this Email Reprints

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