ECB Picks Bank Regulator Andrea Enria to Lead Oversight Arm

(Bloomberg) -- The European Central Bank nominated veteran regulator Andrea Enria to become the second-ever head of its supervision arm, succeeding Daniele Nouy.

Enria, whose appointment must be approved by European Union lawmakers, beat out Irish central banker Sharon Donnery for the job. As head of the European Banking Authority for nearly eight years, Enria has weighed into major EU debates from Brexit to bad loans, and has played a key role in coordinating Europe’s position on global banking standards.

The 57-year-old Italian will be front and center as the ECB grapples with money-laundering scandals, a mountain of bad loans on banks’ balance sheets and anemic profitability at many firms. As chairman of the ECB Supervisory Board, Enria will play a major role in shaping the direction of lenders, many of which are struggling to adapt to low interest rates just as competition from fintech starts to bite.

“Enria’s leadership of the EBA has really put him at the forefront in Europe,” Volker Wieland, a professor at the Goethe University Frankfurt, said before Wednesday’s decision. Wieland pointed to Enria’s success in turning the EBA’s stress tests into valuable gauge of financial strength, and the international experience he gained through his work with the Basel Committee on Banking Supervision. “He has done a good job and has shown he is competent.”

Prudential Rules

Enria has led the EBA since its creation in 2011. The regulator, which will move to Paris from London before Brexit, drafts standards for banks that supervisors such as the ECB put into practice. He came to the EBA from the Italian central bank, where he held a range of policy jobs, including head of the department responsible for issuing prudential rules. Enria’s also no stranger to the ECB, where he previously did stints working on financial stability and supervision.

Atop the ECB’s oversight arm, he’ll help set capital requirements for the euro area’s biggest banks, vet their managers and manage Brexit relocations, as many firms shift some operations from London to the currency bloc.

Roberto Gualtieri, chairman of the ECON Committee of the European Parliament, said in a text message that he’s sure Enria will ensure a “strong commitment to the European project and to the completion of the Banking Union.”

Italian Finance Minister Giovanni Tria said Enria is an “excellent choice” to succeed Nouy, according to a statement from his office.

Wider Shakeup

The nomination announced on Wednesday is part of wider shakeup at the central bank, with senior jobs on the monetary-policy side also coming into play in forthcoming horse-trading between euro zone governments.

Ireland is holding out hopes that its central bank governor, Philip Lane, might replace ECB Chief Economist Peter Praet when his position comes due next year. Enria’s victory over Donnery might aid that prospect, since it has removed the potential for opposition to Lane’s appointment because it would previously have given the country senior positions for two of its nationals at a single institution.

Enria’s nomination could also be a setback for the ECB as it tries to defuse criticism that its leadership isn’t sufficiently diverse. The Supervisory Board currently has two women at the top, Nouy and her deputy, Sabine Lautenschlaeger, whose term ends next year. Donnery, who lost out to Enria, has steered the ECB’s efforts to reduce banks’ non-performing loans.

Nouy, the outgoing head of supervision, helped build the ECB’s oversight operation from scratch and pushed consistently for greater standardization of rules across Europe. While investors have lauded that achievement, some fault her for not making sufficient progress in cleaning up banks’ balance sheets.

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