At a City lunch yesterday, two of the most powerful investment bankers in London sank their polished brogues into Mervyn King. The Governor’s handling of the Northern Rock crisis had been woeful, said one, and the attempt to justify his actions on national radio horribly ill-advised.

London’s international reputation as a financial centre had taken a terrible knock, piped up the other, who was fresh back from Davos. It was a lack of leadership in Threadneedle Street that was partly to blame, he said.

There is an irony here. In the ten years that Mr King has held the reins at the Bank of England, first as deputy governor, then as Governor, he has presided over an unprecedented period of growth and affluence for the City.

Traders who might have made £200,000 annually back in 1998 made £2 million last year. The rainmakers, who had to make do with £1 million or £2 million a decade ago, are pulling in £10 million or £20 million today. The City has by many measures overtaken Wall Street as the epicentre of global capitalism.

Part of the credit has to go to the Bank for its role in managing the British economy and reassuring the rest of the world that London was a solid and stable place to do business.

But Mr King lost credibility with the City last autumn because of his handling of the credit crunch, in general, and the Rock crisis in particular.

Like a preacher pronouncing the virtues of teetotalism to alcoholics, he refused to hand out loans to banks desperate for a snort of cash — in marked contrast to his peers on the Continent and in America.

When the Rock was perched on the precipice, he and the Government hesitated, leaving it three days before guaranteeing deposits, by which time the Rock was a crock. But my two bankers, despite their concerns, were not so sure that Mr King should not be given a second term. “Who else is there?” shrugged one. Faute de mieux, Mr King would have to do.

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