Ex-UBS Chief In Frame To Head Bank Watchdog

A former Deutsche Bank (LSE: 0H7D.L - news) and UBS (LSE: 0QNR.L - news) executive has emerged as a surprise contender to become Britain's top banking regulator.

Sky News has learnt that Mark Yallop, whose CV also includes a spell as chief operating officer of Icap (LSE: IAP.L - news) , the interdealer broker, is in the frame to become the next chief executive of the Prudential Regulation Authority (PRA).

Mr Yallop is already a non-executive director of the PRA, having been appointed in the summer of 2014, but a Whitehall source close to the process said he had indicated he would be interested in succeeding Andrew Bailey as its chief executive.

The news of Mr Yallop's involvement in the process comes as George Osborne, the Chancellor, closes in on a decision about who will take over at the PRA.

It (Other OTC: ITGL - news) was unclear on Thursday whether Mr Yallop was the preferred candidate for the job, although sources suggested that an announcement could come as soon as next week.

Mr Yallop has held a number of top City jobs, including serving for a brief period as chief operating officer of BBA Libor, the former administrator of the scandal-hit interbank lending benchmark.

At UBS, he played a central role rebuilding the Swiss bank's relationship with regulators after it was fined nearly £1bn for attempting to rig benchmark rates.

He is well-regarded at the Treasury, but his employment at three of the firms fined for their role in Libor-rigging could yet be seen as a reputational risk to appointing him to run the PRA.

There is stiff competition for the post of overseeing the UK's vast banking and insurance industries, with several internal and external candidates interviewed to replace Mr Bailey.

They include Lyndon Nelson, the PRA's deputy chief executive, although sources suggested he was unlikely to land the job.

Another strong contender would be Charles Roxburgh, a senior Treasury official whose oversight of his financial services brief has earned praise from the industry.

The recruitment of a new PRA chief has been triggered by Mr Bailey's impending move to the sister watchdog, the Financial Conduct Authority (FCA), a move that industry figures believe will give him a good chance of taking over from Mark Carney when he steps down as the Governor of the Bank of England.

Mr Bailey admitted that he had not actively sought the post but that he agreed to move at Mr Osborne's request, amid a growing desire from the Treasury for a "new settlement" between regulators and the City.

The PRA's next chief executive will play a crucial role bedding down a new era of financial regulation in the UK, ranging from the implementation of the new Solvency-II regime for the insurance industry to the ring-fencing framework that will reshape Britain’s biggest banks from 2019.

Other internal candidates reported to be in the frame for the PRA role include Megan Butler, the executive director for international banks supervision who is on secondment to the FCA.

The PRA and the Treasury refused to comment.