An interim FCA chief executive will be appointed before Bailey’s departure to manage the organisation until a permanent successor is chosen, HM Treasury said.
Bailey has led the FCA since July 2016, having previously held the role of deputy governor of the Bank of England for prudential regulation and CEO of the Prudential Regulation Authority (PRA).
He has been a member of the bank’s Financial Policy Committee since 2012.
Bailey will be the 121st governor in the bank’s 325-year history and the ninth to be appointed since the bank’s nationalisation in 1946.
He has been appointed for an eight-year term and will receive a salary of £495,000.
Carney, who took on the role in 2013, has once again extended his stay in the position, this time just from 31 January to 15 March, to facilitate the departure.
He previously extended his notice period twice to help ensure a smooth Brexit process for the national economy.
Bailey said it was a tremendous honour to be chosen as governor, particularly at such a critical time.
“The bank has a very important job and, as governor, I will continue the work that Mark Carney has done to ensure that it has the public interest at the heart of everything it does,” he said.
“It is important to me that the bank continues to work for the public by maintaining monetary and financial stability and ensuring that financial institutions are safe and sound.
“I am committed to the bank being an accessible and approachable institution, as well as an open and diverse place to work,” he added.
Bailey also thanked his colleagues at the FCA for their work during his time leading the regulator.
Carney said he was delighted to welcome Andrew Bailey back to the bank as its next governor.
“Andrew brings unparalleled experience, built over three decades of dedicated service across all policy areas of the bank, and most recently as CEO of the FCA,” Carney said.
“Andrew is widely and deeply respected for his leadership managing the financial crisis, developing the new regulatory frameworks, and supporting financial innovation to better serve UK households and businesses.
“Over the years, I benefited greatly from his support and wise counsel. I wish Andrew and the bank continued success in their work to serve the people of the United Kingdom by maintaining monetary and financial stability,” he added.
Announcing the appointment, chancellor Sajid Javid said: “When we launched this process, we said we were looking for a leader of international standing with expertise across monetary, economic and regulatory matters.
“In Andrew Bailey that is who we have appointed. Andrew was the stand-out candidate in a competitive field. He is the right person to lead the bank as we forge a new future outside the EU and level-up opportunity across the country.
“I also want to take this opportunity to thank Mark Carney for his service as governor. The intellect, rigour and leadership he brought to the role during a critical time was a significant contribution to the UK economy moving to recovery and growth,” Javid added.
History at the bank
Bailey joined the bank in 1985 and has held roles including executive director for banking services and chief cashier, private secretary to the governor, and head of the international economic analysis division in monetary analysis.
Treasury noted that he led much of the bank’s work on bank resolution and supervision following the crisis of 2007/9 and that he has extensive international experience through his work with the Financial Stability Board, and the International Organisation of Securities Commissions.
The process for recruiting a permanent FCA chief executive will be run by HM Treasury and will follow the government’s Principles of Public Appointments and Governance Code, as overseen by the Office for the Commissioner for Public Appointments.