PROFILE: Howard Davies; Howard's way to the Bank

HOWARD DAVIES is miffed. To the best of his knowledge, the Downing Street vetting machine has not been checking up on his extra-marital activities - or lack of them.

"I don't like the implications of that, if they really haven't been asking around," he said with a poker face.

The new deputy governor of the Bank of England, appointed last week to replace the maritally errant Rupert Pennant-Rea, cannot resist gently making fun of his predecessor's embarrassment. But he chan- ges gear smoothly to report that he seriously intends to get in touch with Pennant-Rea to discuss management topics at the Bank.

Throughout his high-flying career, Davies - who is 44 but at first sight looks 60 because of his bald pate and white hair - has displayed a powerful combination of irreverence and razor-sharpness that a succession of top- drawer potential employers have found attractive. Awareness of his own ability and the natural independence that many only children acquire have also given him a self-confidence reaching well beyond his years.

The son of a Manchester pub estate manager who qualified as an architect at evening classes, Davies soared through the education system, going from Manchester Grammar School by scholarship to Merton College, Oxford, where he achieved what he is careful to describe as a "perfectly respectable" second-class degree in history and French. "I was the first Merton history scholar in a long time not to get a first," he recalled, "but then I was doing French as well." He was also pursuing an energetic university career in acting and journalism, editing the student newspaper, Cherwell, with the current editor of the Times, whom he still refers to chummily as "Pete" Stothard.

Despite Davies's lack of a first, by the time his class of degree was known he had already talked his way into a job with the Foreign Office. "I thought of going into journalism," he said, "but I applied to the FO, along with Shell, Mitsui and what was then the British Overseas Airways Corporation, because I thought they would give me the chance to travel, in the way one does. The FO job came up early, and it was the sort of offer you mentioned in the Junior Common Room."

But he soon found that the diplomatic life was not for him. Although he stayed for two years, he decided he had had enough after three months at the Paris embassy negotiating with the Department of Protocol at the Quai d'Orsay about how many motorbikes should escort the British foreign secretary's car from the airport. "It wasn't fair," he said. "My counterpart at the Dutch embassy had some policy responsibility - I was just concerned with protocol."

Davies fancied a shot at management and lined himself up a place at London Business School. But the Civil Service decided he was too valuable to lose, so he was transferred to what he found was the more congenial atmosphere of the Treasury.

That proved to be a smarter move than he could ever have guessed. He came into regular contact with a middle-ranking Bank of England executive called Edward George.

However, Davies decided that - for the time being at least - the Civil Service was not for him. "I didn't think I was quite suited to going into the same building every day until I was in my sixties," he said.

So he undertook that delayed business course - at Stanford, California - before joining McKinsey, the prestigious US management consultants. There Davies found himself working for Archie Norman, now chief executive of Asda, the supermarket group, on a study for Benson & Hedges, the cigarette maker.

"He was supposed to be doing the number-crunching while I did the communicating with the client," said Norman. "But Howard being Howard, it ended up the other way around."

The two have kept in touch and Norman reckons that Davies has the best "five-second mind" he has met, meaning his ability to sum up situations very quickly and make an incisive comment. "He genuinely enjoys government and government issues," Norman added, "and hopping in and out of ministers' offices. But everything he has done has been exactly right for Howard, and that includes the Bank of England. He will be an absolute tower, bridging the gap between the Treasury and the City."

While Davies was at McKinsey he had a spell at the Treasury as a special adviser to Nigel Lawson. A junior whip at the Treasury then was a certain John Major.

"That was a very fortunate contact," Davies agreed. "Funnily enough, while I was there my wife, Prue, was working on a Channel 4 News programme of 'tips for the top'. She asked me if I had any ideas, and I did suggest Major. Do you know, they didn't even take me seriously."

Meanwhile, a past contact at McKinsey helped Davies to his next job - and possibly the one after that. He was flying back from visiting a client in New Zealand when he met John Banham, later Sir John, at Singapore airport. Sir John was about to quit as controller of the Audit Commission to become director-general of the Confederation of British Industry.

"Who's replacing you?" inquired Davies. "Er . . . you are," Banham replied. Davies insists that that was a joke, but accepts that Banham put in a good word for him - as he did at the CBI, five years later, when that job fell free.

"I've always been ambitious," said Davies, "except that some people think that means you have an overriding goal. I have been opportunistically ambitious. If someone says 'Here's a difficult job you probably can't do. Would you like to have a go?' I say 'What do you mean, I can't do it?' I'm prepared to take risks. But if you ask where I'll be in 15 years, I am at a loss."

If Archie Norman's experience is anything to go by, Eddie George will have to keep an eye on his new deputy when he turns up at Threadneedle Street in September.

Davies intends to take seriously his responsibility for the Bank's internal organisation, and pointed out that he would have to stand in for the governor for long stretches when George is abroad. He is also a keen advocate of the Bank's independence.

Moving the Bank of England to west London is Davies's only half-joking initial recommendation to his new employer. "Why not?" he asked. "After all, there is no reason why it needs to occupy that prime site in the City of London. And it just so happens that I live west of London, so it would be a lot more convenient for me."

But even if he cannot persuade George to up sticks, he can at least console himself that the Bank's sports ground at Roehampton is not too far from his home.

Davies is a keen sportsman, but at the age of 44 he is finally having to bow to Anno Domini, forsaking his beloved football for cricket.

"I had a real Gazza injury on my left knee this season," he grumbled. "Tore my cartilage and ruptured my cruciate ligaments, just like Paul Gascoigne.

"Cruciate ligaments can be mended, as they have with Gascoigne, but to my chagrin the doctors said it wasn't worthwhile in my case."