Bank's Gieve quits as reforms announced

By Sumeet Desai

LONDON (Reuters) - Bank of England Deputy Governor John Gieve announced on Wednesday he is to quit prematurely, just as the government unveils the biggest shake-up of the central bank's financial stability remit in more than a decade.

Gieve, who has specific responsibility for keeping the financial system on an even keel, has come under harsh criticism for his part in the authorities' handling of the credit crunch and the collapse of mortgage lender Northern Rock.

"Sir John Gieve has decided he will leave the Bank next year, once changes to the Bank's responsibilities have been made," the BoE said in a statement.

"Sir John believes the Bank's new responsibilities should be led by a new deputy governor who will serve a full term."

The shock resignation, to take effect in spring 2009, is likely to be regarded as a reaction to changes in how the government wants the central bank to be responsible for, and manage, financial stability.

It may also cause embarrassment for Bank Governor Mervyn King as it follows hot on the heels of a decision by his other deputy, Rachel Lomax, to not pursue a second term.

It is unlikely, however, that Gieve's departure -- two years before it was due -- will prompt too many tears elsewhere.

"It's not surprising that he is stepping down because of the deep problems of the last year," the chairman of parliament's powerful Treasury Select Committee, John McFall, told Reuters.