Mark Carney kept two key Bank of England committees out of the loop when he decided to throw Threadneedle Street’s support behind George Osborne’s controversial decision to sell the state’s stake in RBS.
Last week, the Bank of England Governor wrote a letter to the Chancellor arguing that a “phased return of RBS to private ownership would promote financial stability, a more-competitive banking sector, and the interest of the wider economy”. This was presented as the institutional view of the Bank of England — and Osborne cited the Governor’s letter at last week’s Mansion House dinner as a strong reason to begin sales now.
But the Evening Standard understands the question of RBS’s early sale was not formally discussed by the Bank’s full financial policy committee or the Prudential Regulation Authority board — which includes independent, external members — despite these bodies being specifically tasked with safeguarding financial stability and facilitating banking competition.
The omission could raise questions about Carney’s commitment to increasing transparency at the Bank of England and running it in a more-consensual style.
However, a Bank spokesman rejected suggestions of a lack of transparency.
“The details relating to the Bank of England’s view on the sale of RBS were discussed internally at the Bank of England, including with the senior executive team... those discussions took place in good time ahead of the formal announcement by the Chancellor at Mansion House and exchange of letters.”
