In 2013, the successor to current BoE Governor Mervyn King will be tasked with heading up the regulation and supervision of banks and big financial institutions.
Giving an interview to the BBC’s business editor Robert Peston, Sants (pictured) warns the role could be too much for one person given the size of the task.
Sants says: “We could be concerned that the operational task given to the governor, as an individual, is just too great. I think the risk is that operationally this is going to be too difficult for just one person to manage.”
Until announcing he was to quit the regulator earlier this year, Sants was due to head up the new Prudential Regulation Authority which will sit within the Bank of England. The Treasury select committe has raised a number of concerns about governance and accountability issues given the new powers the bank will be taking on.
Sants also warns of the dangers of the UK sitting outside the banking union proposed by the European Commission. Chancellor George Osborne has indictated that the UK is unlikely to want to be part of the type of banking union proposed this week by EC president Jose Manuel Barroso.
He says: “If you move to an environment where the majority of the countries were inside the eurozone and therefore had a somewhat different agenda in respect to the rulebook, that would become an unworkable model where we would become dependent on a rulebook that we had effectively no control over.”
Sants suggests the Government and the BoE could have avoided a run on Northern Rock if they had taken up his idea to provide a loan to Lloyds to buy the bank.
Sants says: “I think things would have been different if the Government and Bank had taken my recommendation that they should provide liquidity support to Lloyds to purchase Northern Rock
“I think that would have made a difference. It would have avoided the queues at Northern Rock and it would have changed the general climate in relation to the old building society sector that had moved into the banking sector.”