Central bankers secretly search for top-notch boss

www.forbes.com Reuters, 01.09.03, 9:42 AM ET By Karen Iley and Peter Nielsen

GENEVA/LONDON, Jan 9 (Reuters) - Wanted: Well-connected, market-savvy financier with superb diplomatic and social skills who can command the respect of the world's top central bankers.

That was the challenge facing the Bank of International Settlements (BIS) as it secretly scoured the globe over the last four months for a successor to general manager Andrew Crockett.

Poised to name its new boss on Monday, the typically low-key BIS is tight-lipped on who has even made it to the short-list.

But finding a successor to Crockett, who will step down at the end of March, will be no easy task, given the Briton's good record, the daunting job description and the "musical chairs" going on elsewhere in the central banking and supervision arena.

Crockett, who moved to the BIS in 1994 from the Bank of England, is widely credited with transforming the BIS from a European-dominated body to a global institution.

The BIS, which now has offices in Hong Kong and, since November, Mexico, may want to continue his work by looking to a non-European for the first time in its 70-year history.

For sure, the search committee, headed by BIS Chairman and Dutch Central bank Governor Nout Wellink, wants a high-calibre candidate -- someone with a track record of "proven independence and personal integrity...outstanding management skills and have high stature in the international financial community."

"We are simply looking for the best candidate in a broad field," Wellink said in September.

NON-EUROPEAN? Set up in 1930 to deal with German war reparations, the BIS has only had Europeans at its helm: Five Frenchmen, one German, one Belgian and a Briton.

The BIS serves a variety of roles, including fostering international monetary and financial cooperation, serving as a bank for central banks, a research centre, a prime counterparty for central banks' financial transactions, and an agent or trustee with regard to international financial operations.

However, the BIS has taken on a much more global role in recent years and if it were to pick an "outsider" it would certainly hammer home the message that its role has expanded to one of a truly international body.

Two Latin American names have cropped up.

Arminio Fraga, the former President of the Central Bank of Brazil and ex-hedge fund manager for billionaire George Soros, was applauded for keeping Brazil's economy on track during the Latin American crisis of the late 1990.

Fraga, replaced at the central bank at the start of 2003 by Henrique Meirelles under new president Luiz Inacxio Lula da Silva, is seen as competent and investor-friendly.

Guillermo Ortiz, Mexican central bank chief, ends his term in December, and has presided over a booming recovery in the domestic economy.

Both have superb track records and perhaps more importantly, both are members of the prestigious Group of Thirty so would certainly qualify as well-connected to the elite of the international financial establishment.

The BIS, however, is more likely to play it safe.

Global financial stability, one its main concerns, mainly involves the major developed economies, not emerging markets. It may thus be too soon for the BIS to pick someone outside the realm of the Group of 10 leading economies.

Among such candidates are former Swedish central bank governor Urban Backstrom, out of work after resigning at the end of 2002. He is still young, has solid contacts, is well-respected and a former BIS president.

Other possibilities among the Group of Thirty members include Jacob Frenkel, former governor of the Israeli central bank and current chairman of Merrill Lynch International (nyse: MER - news - people), and Gerd Hausler, counsellor and director of the IMF's international capital markets department.

The search committee includes Bank of France chief Jean-Claude Trichet, who is hoping to switch to the European Central Bank to take over from Wim Duisenberg, provided he emerges unscathed from a banking scandal trial.

It also includes Bank of Japan deputy governor Yutaka Yamaguchi, who is set to lose his boss Masura Hayami, at the end of March, as well as the Bank of Italy's Antonio Fazio, the Federal Reserve's Roger Ferguson and Jean-Pierre Roth of the Swiss National Bank. The inclusion of Yamaguchi and Ferguson suggests that the BIS is not restricting its search to Europe, but it does not shed light on whether it would consider a non-G10 candidate.

As for Crockett, he is continuing to play a role in the high-finance job swap.

His departure nine months ahead of schedule sparked talk he may take over from Sir Edward George as Governor of the Bank of England. But Deputy Governor Mervyn King got that job and Crockett is now tipped to replace Howard Davies as chairman of Britain's Financial Services Authority (FSA).

Crockett's resignation also means the Financial Stability Forum, a body set up in 1997 to promote international financial stability, is likely to be looking for a new chairman.