ECB Chooses Italy’s Andrea Enria for Top Banking Watchdog Job (FT)
Last Modified: 12:35 PM, Wed Nov 07, 2018

Claire Jones in Frankfurt and Caroline Binham in London 07 November 2018

Italy’s Andrea Enria is set to become the eurozone’s chief banking supervisor, after the European Central Bank backed his appointment in a secret ballot on Wednesday.

The ECB said a majority of its governing council supported Mr Enria, currently chair of the European Banking Authority, for the position of chair of the Single Supervisory Mechanism over the early favourite, Sharon Donnery, a deputy governor at Ireland’s central bank.

The announcement all but seals the race for the most important job in European financial regulation.

The SSM, whose head Danièle Nouy steps down at the end of the year, is the ECB’s supervision arm and serves as the watchdog for the single currency area’s biggest banks.

By contrast, the EBA, which was created in the wake of the financial crisis and has been chaired by Mr Enria since its inception, is a less powerful body that seeks to co-ordinate the actions of banking regulators throughout the EU.

A European Parliamentary hearing on November 14 still needs to take place, after which the parliament must approve the appointment at a plenary vote in December.

Lawmakers are unlikely to object to Mr Enria’s appointment, having earlier said that he was the most experienced candidate on the three-person shortlist for the job. The third candidate was Robert Ophèle, president of the Autorité des Marchés Financiers, the French banking regulator.

Roberto Gualtieri, chair of the Parliament’s Committee on Economic and Monetary Affairs, welcomed Mr Enria’s nomination, highlighting his “outstanding experience in banking and financial regulation and supervision.”

The 57-year-old Mr Enria, a career banking supervisor, is likely to begin a five-year term at the SSM at a time when it is assuming outsize importance.

The regulator is responsible for granting banking licences to British and US banks that must relocate parts of their business to the EU in order to retain access to the bloc after Brexit.

Mr Enria previously worked at the ECB and the Banca d’Italia — led at the time by ECB president Mario Draghi — as well as with the predecessor agency to the EBA.

While an Italian official described him as “balanced, objective and impartial”, Mr Enria did not receive Rome’s backing and is unpopular among some bankers in the country who believe they have been unfairly penalised by the EBA.

Nicolas Véron, senior fellow at Bruegel, a think tank in Brussels, added: “Inevitably there will be negative comments in Germany because Mr Enria is Italian. These miss the point. Mr Enria has demonstrated in the past few years that he was not captured by Italian interests.”

But his appointment will also raise fresh concerns about the dearth of female appointments to top positions within the eurozone’s central banks.

Ms Donnery is highly regarded within the ECB and was tipped as favourite in the race after several northern European countries backed her candidacy. Her chances declined in recent days when Mr Enria’s supporters stepped up their attempts to secure the position for the Italian.

However, she is considered the favourite candidate to succeed Philip Lane as governor of the Irish central bank. Mr Lane, who is often described as one of the best economists on the ECB’s governing council, is now favourite for the position of chief economist on the ECB executive board — which will become vacant in the summer of 2019.

Insiders in Frankfurt and Brussels had said it was unlikely that Dublin could secure two senior ECB positions in such a short time.

His appointment will briefly reunite him with Mr Draghi, who is scheduled to leave office in October 2019, putting two Italians in the top ECB jobs as a stand-off continues between EU institutions and Rome over Italy’s plans to run a big budget deficit.

The SSM also supervises the largest Italian lenders, including Monte dei Paschi, which was rescued by the country’s government last year under a multibillion euro restructuring.

Italian banks are still weighed down by €900bn of bad loans — part of a broader EU-wide problem that Mr Enria has tried to get the bloc’s regulators to tackle during his time at the EBA.

But the most recent stress tests conducted by the EBA, published last week, largely gave a bill of health to the bigger Italian banks.

Additional reporting by Arthur Beesley in Dublin.

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