The chief executives of Canada’s biggest banks were caught off-guard at 10:30 a.m. Monday when Tiff Macklem, senior deputy governor of the Bank of Canada, handed them a news release announcing Mark Carney’s departure.
Though Canada’s central bank Governor had been rumoured for months to be a leading candidate to run the Bank of England, confirmation that he is leaving Canada had remained a closely held secret until that moment.
“I had no idea,” Royal Bank of Canada CEO Gordon Nixon said after leaving a meeting in Toronto between bank executives and Mr. Carney, where the news was unveiled. “I was surprised,” said Bank of Nova Scotia CEO Rick Waugh.
The CEOs meet at least twice a year with the Bank of Canada Governor and the head of the Office of the Superintendent of Financial Institutions to discuss issues facing their sector. However, when the executives arrived at the central bank’s Toronto offices Monday morning, they were told Mr. Carney would not be attending.
Mr. Carney, who will step down on July 1, is leaving the Bank of Canada on relatively stable footing compared with when he came into the job as the global financial crisis was unfolding. His job, at least publicly, over the past year has focused on keeping interest rates low in an effort to spur business investment, while also warning about rising consumer debt levels.
His new job will bring more pressing challenges, as the Bank of England looks to repair some of its image after scandals over interest-rate fixing.
“It’s a positive reflection on [Mr. Carney], and a positive reflection on Canada,” Bank of Montreal CEO Bill Downe said. “It would be going too far to say that it’s a confirmation that Canada has a magic formula; it’s just simply a reflection on the fundamentals … He has sound technical skills, and he has a practical understanding of how markets work.”
National Bank of Canada CEO Louis Vachon figures a key piece of Mr. Carney’s tenure at the central bank was his time mentoring under former governor David Dodge during the financial crisis. “I think it was the fact he was battle-tested. He did his transition with David Dodge in the middle of the financial crisis,” Mr. Vachon said. “That was the leadership [Mr. Carney] demonstrated in Canada and globally during the financial crisis. I was pretty front-row at that time and it was a pretty well-deserved reputation.”
Toronto-Dominion Bank CEO Ed Clark praised Carney for his direction over the past few years “Personally, I have appreciated our good working relationship, and I believe the Bank of England will benefit from Mark’s strong knowledge,” Mr. Clark said.
The move also caught the banking sector by surprise in part because few observers believed the Bank of England would take the unusual step of looking beyond its borders for a new governor. “Obviously everybody knows Mark very well and is very fond of him,” Mr. Nixon said. “And I think [we were] surprised … that the U.K. would actually choose a governor who is a non-U.K. citizen.”