His first job is likely to be overseeing the Government’s plans to break up Northern Rock into a “good” and “bad” bank.
The European Commission is expected to give the green light on this later today.
The split would create a good bank of retail deposits, mortgages and branches which would be sold off to a third party.
The “bad” bank which is the remaining riskier loan book would be left to wind down in state hands, though sales of some of the mortgages it holds may be considered in the long-term.
Chancellor Alistair Darling will decide whether to sign off on the choice of Budenberg later today.
The Government says that the Northern Rock sale combined with the planned sell off of parts of Lloyds Banking Group and RBS would create three banks in the UK with a combined market share of around 15 per cent.
Speaking this morning on BBC Radio 4’s today programme, Liberal Democrat Shadow Chancellor Vince Cable said he was “deeply suspicious” of the proposed break up of state-backed banks.
He said: “I’m deeply suspicious – I fear that what may come out of this is the better parts of the banks may be sold off and sold off cheaply to the highest buyer – and the rubbish… will be left with the taxpayer which will eventually accrue very large losses.
“There is absolutely no reason to rush into this when what will happen will be a car boot sale situation.”