Beer peer calls for Bank to get its powers back to restore trust

One of the country's leading crossbenchers, Lord Bilimoria, will call for big changes to the Banking Bill when it goes to the Lords for its second reading on Tuesday.

Lord Bilimoria will argue that the Bill, prompted by the collapse of Northern Rock, must restore as much responsibility for banking supervision to the Bank of England as possible. "The tripartite system of regulation between the Treasury, the Financial Services Authority and the Bank of England has been a terrible failure, and has led to many of the problems over the past year," he said yesterday. "The FSA has shown itself to be asleep on the job, incapable of spotting many of the banking disasters which have contributed to the greatest financial collapse since the 1930s."

The founder of Cobra Beer said he would like to see the Bill amended so that the Bank can work in tandem with the FSA, bringing back some of the strengths of the previous system under which the Bank of England looked after banking supervision. "I'm not being nostalgic but there's no question the Bank of England was once the most respected central bank in the world. The way it kept an eye on the banks meant that it knew what was going on and was able to move quickly when it saw problems."

But the same can not be said of the Treasury or the FSA, he said. "There is no respect, no trust and no confidence in any of these bodies. We need to restore this confidence." Lord Bilimoria will also question the Treasury's appalling record on forecasting the economy and the viability of inflation targetting, as well as the role of credit rating agencies. He will also push for the new financial stability committee to be as independent as the Monetary Policy Committee rather than just a sub-committee of the Court of the Bank of England.

Meanwhile, NM Rothschild, banker to Cobra Beer, sent out the sale prospectus to potential buyers last week. Rothschild is looking at two options for Cobra – the first being to sell the whole business for as much as £200m, possibly to big overseas brewers such as Heineken, Carlsberg or Canada's Molson Coors, or to a private equity firm.

The second option would be to split the UK and Indian arms. Buyers which might be keen on picking up only the Indian business include United Breweries of India and SAB Miller.

Lord Bilimoria said that interest in the beer group, which he created nearly 20 years ago, has been high. Cobra's sales are defying the downturn trend in sales of premium beer with volumes up more than 40 per cent last month, helped by its biggest advertising campaign to date as well as a new management team.

Cobra has yet to make a profit but it is one of the UK's fastest growing brands, with sales rising more than 30 per cent last year to £180m.