Sharon Donnery gets closer to top euro zone bank job

Sharon Donnery is getting closer to becoming the euro zone's top bank supervisor as she and her two competitors prepare for scrutiny by MEPs and the European Central Bank.

The deputy governor of the Central Bank of Ireland can count on the support of a bloc of ECB policy makers from northern nations when the governing council holds a secret ballot next month, according to euro-zone officials familiar with the matter.

While the European Parliament could be a bigger hurdle because of her tough stance on bad loans, Ms Donnery has momentum over her opponents with her experience and the desire to redress the ECB's gender imbalance, the people said. They asked not to be named because the process is confidential. An ECB spokesman declined to comment.

The other candidates to succeed Danièle Nouy at the helm of the Single Supervisory Mechanism on January 1st, overseeing 119 of the currency union's biggest lenders, are two men: Italy's Andrea Enria and France's Robert Ophele.

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The SSM chair is the first of four key appointments in the next year that will reshape the leadership of the ECB, including the presidency after Mario Draghi. It's the only one the governing council has a significant role in filling, but the decision is likely to influence how euro-zone governments divide up the other spoils.

"Donnery would be seen positively by those who want faster progress on non-performing loans," said Antonella Sciarrone Alibrandi, a professor at the school of banking, finance and insurance at the Universita Cattolica del Sacro Cuore in Milan. "But we need someone who can embody the European interest and avoid further division by not being too aggressive."

Informal hearings

The three candidates are likely to face informal hearings at the European Parliament on October 23rd in Strasbourg. The ECB’s governing council will then need to choose a single nominee, which could happen at its next non-monetary policy meeting on November 7th. The selected person must be approved by the parliament before the appointment is signed off by governments.

If Ms Donnery has a weakness, it’s probably her views on how fast euro-zone banks should reduce their bad debt. She was behind SSM proposals last year that legislators criticised and successfully fought to get watered down. The European Parliament’s legal service even accused the ECB of overstepping its supervisory powers.

That could open the door to one of the other candidates. Mr Ophele is chairman of Autorité des Marchés Financiers, France’s stock market regulator, and previously oversaw French banks, among the currency bloc’s largest. Counting against him is that Ms Nouy is also French – it is unusual for consecutive holders of senior European posts to have the same nationality.

Enria's strong suit is his seven years of experience running the European Banking Authority, which drafts technical standards for regulating lenders, though his candidacy may be overshadowed in the eyes of some by the Italian banking system's pile of bad debt, the biggest in Europe.

Philip Lane

Another potential hurdle is that if Ms Donnery gets the role, it'll raise question marks over Central Bank governor Philip Lane's chances of being appointed to the ECB's executive board next year. He's considered well-qualified to replace chief economist Peter Praet, but euro-zone finance ministers make board appointments and they may baulk at allowing a small country like Ireland to hold two senior positions.

Still, gender could be Ms Donnery’s trump card. The European Parliament has itself criticised the ECB for having too few women in senior roles, and the central bank has put quotas in place to boost the number of high-ranking female managers. Executive board member Benoît Cœuré said this year that such action “cannot substitute for more resolute action by European leaders to appoint more women to our executive board and governing council.” – Bloomberg