Hector Sants, the chief executive of Britain's financial regulator, will leave the agency after a national election that will determine the future of the Financial Services Authority.
Sants will step down by the end of the summer, the FSA said in a statement. He began his role in July 2007, weeks before problems emerged with subprime mortgages that triggered the credit crunch and two months before a run on deposits at Northern Rock PLC, Britain's first casualty of the crisis.
"When I was appointed I told the board that I planned to serve as CEO for three years, and I intend to stick to that timetable," Sants, 54, said in the statement. "Those three years have encompassed the most extraordinary circumstances for a financial regulator, and I am very proud of the manner in which the FSA rose to the challenge of dealing with such unprecedented turbulence across global financial markets."
The opposition Conservative lawmakers in the U.K. have pledged to abolish the FSA and carve up its duties should they win this year's election, which must take place by June. They said they will return banking supervision to the Bank of England, arguing that the FSA's lax oversight of banks contributed to the crisis.
The FSA was created by Prime Minister Gordon Brown in 1997 in what was one of his first undertakings as the then-chancellor of the Exchequer. The Labour government had swept to power the same year, promising to overhaul financial services so scandals like the collapse of Barings PLC and the closing of the Bank of Credit and Commerce International would not happen again.
Brown's spokesman Simon Lewis told reporters in London that there would be an "orderly succession" to appoint a replacement for Sants.
In addition to the Conservative plans to split up the FSA, the regulator also faces a new framework created by the European Union, which would bolster EU-wide agencies' powers to oversee banks, securities firms and insurers.
"Taken with the Conservative Party threat to break up the FSA, Hector Sants' resignation risks the regulator being viewed as a lame duck," said Jonathan Davies, a regulatory lawyer at Reynolds Porter Chamberlain LLP in London. "This is not the environment in which the future of financial services regulation can be left hanging in the balance for months. It risks sowing too much confusion."
Sants, a former executive at Credit Suisse Group AG, did not say where he would go after a period of six months' leave that he must complete after departing. His resignation comes at a key time for regulation both in the U.K. and across the world, as policymakers grapple with rules in the wake of the worst financial crisis in a generation.