Andrew Bailey: 'Not doing something is always regarded as brave' If you take intensive and intrusive literally, there is no end to it. Take one of the big banks, there are probably a dozen prudential supervisors working on a big bank, but you could have 120, you could have 200, of course in the US they do. There is no end to it, unless you are focused and able to apply judgment around that focus," he says. His influence has already been felt at the FSA. Gone is the blanket vetting of all director-level appointments brought in immediately after the crisis. Instead, regulators now focus their time interviewing only the most senior candidates, or those joining firms where supervisors have the most concerns. Mr Bailey admits that having told staff to get tougher on banks, it has been difficult to persuade them that a more subtle approach might work better, particularly given their concern at being blamed for not doing enough to prevent a failure. "Not doing something is always regarded as brave," he says. The backdrop against which the PRA will begin life remains combustible, with international disagreements over banking regulations, a series of threats to financial stability, and the relentless lobbying of the banks themselves. Europe, in particular, appears to be a bugbear for Mr Bailey and he says the moves to water down the Basel III capital rules are "disappointing," while he describes European Union plans for detailed and proscriptive bank regulation as a "mistake." It is clear that he feels more affinity with his US peers as he talks wistfully of the Eighties and the British-American deal that was the basis of the original Basel rules that still underpin the US banking system. Just as was the case in the Eighties, there is a strong degree of agreement between the Fed and the UK authorities on issues of substance. I tend to find there is a natural alignment of view," he says. In recent weeks, Mr Bailey has come to public attention amid reports about the pressure he is placing on banks to ensure their bonus pools for 2012 are lower than the previous year. However, he is keen to correct the impression that he spends his days berating bank bosses for paying their staff too much. I don't, by the way, tend to ring people up and say 'get your bonuses down. I'm not sure I've ever made that call. Contrary to public wisdom. That said, he is clear that the financial penalties imposed on banks over the last 12 months, most recently HSBC's record $1.9bn (£1.2bn) fine over money-laundering, must be reflected in lower bonuses. "Variable remuneration pools for the coming year should be calibrated to take account of the hits that an institution has taken," he says. Beyond financial penalties, Mr Bailey is clearly concerned at the potential for even more serious action being taken against banks and agrees that, like it or not, some major financial institutions are too big to prosecute. It [a criminal indictment] would be a very destabilising issue. It's another version of the too important to fail. So, too important to prosecute? Because of the confidence issue with banks, a major criminal indictment, which we haven't seen yet and I'm not saying we are going to see... this is not an ordinary criminal indictment.