LLOYDS BANKING GROUP PLC 
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The government said Bischoff, who is stepping down from his current post as chairman of Lloyds Banking Group (>> Lloyds Banking Group PLC), will join the FRC on May 1, replacing Baroness Hogg whose departure had already been announced.
Gay Huey Evans, an FRC board member, will become the watchdog's deputy chair, replacing Glen Moreno.
Hogg engineered an internal revamp at the FRC in a bid to give a clearer identity and stronger decision making to a watchdog with a broad remit that ranges from auditing and accounting to corporate governance and actuaries.
The watchdog has a much lower public profile than other regulators such as the Financial Conduct Authority or the Bank of England.
The FRC fined Deloitte, one of the world's big four accounting firms, a record 14 million pounds last September over its work for failed carmaker MG Rover Group, helping to mute criticism it has been too soft on top book-keepers in the past.
The FRC has come under increased pressure from lawmakers to scrutinise bank audits in particular after accountants gave banks a clean bill of health just before taxpayers had to rescue them in the 2007-09 financial crisis.
"Whilst significant progress has been made in recent years, we still have some way to go in rebuilding trust in business and the professions of which the FRC has oversight," said Michael Izza, chief executive of the ICAEW, an accounting body.
Bischoff will bring years of experience in banking to a watchdog that has been given much tougher sanctioning powers since the financial crisis.
"His financial sector experience and track record of running boards will be invaluable to the FRC on the next stage of its journey," Hogg said in a statement.
Bischoff oversaw a restructuring and return to profitability at Lloyds, rescued by the government through a 20 billion pound ($31 billion) bailout during the financial crisis which left Britain with a 39 percent stake.
Born in Germany during World War Two, his career in the banking sector has spanned five decades. He has also previously called for a reform of accounting standards.
Bischoff worked at Schroders (>> Schroders plc) before its investment banking arm was acquired by Citigroup (>> Citigroup Inc) in 2000. He became chairman of Citi until stepping down in 2009 and joined Lloyds shortly afterwards.
The FRC announced this week it will investigate KPMG's audit of scandal-hit Co-op bank.
Under Hogg, the watchdog took steps to put pressure on banks and other listed companies to change their accountants more frequently to avoid cosy relationships.
The European Union has gone further and has agreed new rules for mandatory switching of book-keepers, a step the FRC opposed.
FRC Chief Executive Stephen Haddrill welcomed Bischoff's understanding of capital markets and the needs of investors.
(Reporting by Huw Jones, editing by David Evans)
By Huw Jones
