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Lagarde Risks Showdown With EU Parliament Over Race to Lead ECB Bank Watchdog
(Bloomberg) -- European Central Bank chief Christine Lagarde is risking a showdown with the European Parliament as the race to appoint the euro zone’s top banking supervisor nears a conclusion.
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After receiving a letter from lawmakers in late July describing Bank of Spain Deputy Governor Margarita Delgado as better qualified for the job, the ECB president doesn’t appear to have shared it widely with euro-region colleagues who will then choose between her and Bundesbank official Claudia Buch.
There’s still time before Lagarde and her Governing Council meet to decide on the matter on Sept. 13. Even so, lawmakers are starting to question why correspondence issued weeks ago hasn’t been circulated yet to give ECB policymakers a complete view of the candidates vying to run supervision in the 20-nation euro region.
“It is a very atypical situation,” Eva Maria Poptcheva, a vice-chair of the Committee on Economic and Monetary Affairs, said in comments to Bloomberg. “Parliament does not appreciate having its official opinion ignored. We insist that the opinion we express be taken into consideration and treated with respect.”
Two other colleagues, speaking on condition of anonymity, also told Bloomberg of their puzzlement. The president of the committee, Irene Tinagli, declined to comment when contacted on the matter.
While it’s not unknown for EU institutions to disagree with the parliament, the succession at the Single Supervisory Mechanism is a matter risking greater consequences than usual because the ECB’s choice of a single candidate needs to go back to lawmakers for approval before a final sign-off by governments.
The SSM job is up for grabs because Andrea Enria’s five-year non-renewable term as chair ends in December. The Italian is the euro zone’s most senior regulator, directly overseeing the bloc’s major lenders in a role endowed with a powerful voice to shape rules determining the industry’s structure.
Whoever succeeds him will contend with potential fallout from rising interest rates, as well as bankers seeking to boost shareholder payouts to lift stock prices that have been battered since the 2008 financial crisis.
The backdrop to the selection is complicated by a flurry of appointments of positions currently ongoing as EU countries compete to place their nationals atop major institutions.
Buch’s successful candidacy would compensate Germany for having lost some key posts recently, while avoiding giving Spain too much at once, just as its deputy prime minister, Nadia Calvino, vies to lead the Luxembourg-based European Investment Bank.
Luis de Guindos, a former Spanish economy minister, is currently vice president of the ECB, while his fellow countryman José Manuel Campa runs the EU-wide European Banking Authority.
The SSM race has been running in tandem with the EIB process. After closed-door hearings in mid-July, the Parliamentary committee’s coordinators agreed to back Delgado because she has deeper knowledge of banking supervision than Buch, according to Poptcheva, a lawmaker from Spanish party Ciudadanos.
“We do not understand why this letter has not been distributed to all the members of the Governing Council, so that they can make a well-informed decision,” Poptcheva said.
The Spanish candidate was formerly a senior official at the SSM. Buch is a trained economist, but she has gained experience of banking regulation in recent years, and arguably has a bigger global profile after close to a decade in her current role.
An ECB spokesperson declined to comment specifically on the letter.
“The European Parliament is an essential part in the selection process of the chair of the Supervisory Board of the ECB, as the candidate proposed by the ECB must be approved by the EP,” the spokesperson said in a statement.
While non-binding, the committee’s assessment has previously been a key stage in the appointment process.
Their backing this time for Delgado was a boost for her until Spain’s decision to nominate Calvino for the Luxembourg job.
Her main rivals for that role are Margrethe Vestager — who has stepped aside as EU Competition Commissioner to campaign for the post — and former Italian Finance Minister Daniele Franco.
A preliminary decision on the EIB could take place shortly after the Governing Council’s upcoming meeting, the people said.
--With assistance from Jorge Valero and Alexander Weber.
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