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Draghi Marks 50 Days of Multitasking at Empty-Chair ECB Watchdog

Draghi Marks 50 Days of Multitasking at Empty-Chair ECB Watchdog

(Bloomberg) --

Mario Draghi is spending a chunk of his final year in office multitasking as a stopgap solution for the swelling empty-chair problem at the European Central Bank’s supervisory arm.

Fifty days ago on Tuesday, Sabine Lautenschlaeger ended her term as vice chair of the Single Supervisory Mechanism, prompting the ECB president to add some responsibilities for the watchdog to his own policy portfolio.

Draghi Marks 50 Days of Multitasking at Empty-Chair ECB Watchdog

Her exit, and the end of Ignazio Angeloni’s stint on the Supervisory Board last month, means four out of six board seats the ECB gets to propose or appoint are now unfilled.

There’s no hint at present that the vacancies are affecting the operational effectiveness of the board, which totals 32 at full strength including national supervisors, and is newly led by Andrea Enria -- an Italian like Draghi. It’s also not clear why the ECB has taken such a casual approach to personnel appointments while seeking to buttress a perception of professionalism and preparedness in the prelude to a possible no-deal Brexit.

“It’s not pretty when you see empty seats, but in the short-term this is an institution that can keep chugging along despite that,” said Helmut Siekmann, a professor at the Goethe University Frankfurt. “Draghi taking on banking supervision shows he recognizes the workload on that front, both in terms of European integration and Brexit, with the incoming banks.”

Draghi Marks 50 Days of Multitasking at Empty-Chair ECB Watchdog

The president’s enhanced responsibilities are supposed to be an interim fix.

Lautenschlaeger’s successor needs to be picked from the current six-member Executive Board, but Draghi hasn’t yet done so. A mismatch between the five-year term of the job and the eight-year stint for Executive Board members isn’t assisting him.

Enria, the former head of the European Banking Authority, is helping to fill the vacuum left by Lautenschlaeger, for example by reporting to the ECB’s leadership, according to people familiar with the matter, who asked to remain anonymous because such meetings are private.

Enria’s fellow board members are supposed to shoulder some of the workload. Angeloni, for example, dealt with lenders that fail or enter a crisis.

The ECB’s responsibilities are growing as London-based banks set up or expand outside the U.K. as it leaves the European Union. The ECB says seven large British-based banks are moving about 1.2 trillion euros ($1.35 trillion) of assets to its remit. It already has direct oversight of more than 80 percent of the euro area’s 21 trillion-euro combined bank balance sheet.

Changing the law that governs the ECB’s supervisory arm and its board members could make the job more attractive, according to Angeloni.

“It currently lacks a clear indication of what the roles of these members should be and doesn’t give them enough of a profile to perform their function,” he said in an interview last month.

That’s easier said than done, and Draghi might not end up addressing the matter if he leaves the vacant appointments to the ECB’s next president, who will take office in November. The central bank doesn’t tend to openly advertise for the supervisory board positions.

Siekmann said the ECB may be waiting to see how other top EU jobs are distributed between countries after elections to the bloc’s parliament in May. Still, the inability to fill the supervisory positions could open the central bank up to criticism, he said

“If these positions stay vacant for a longer period of time, then you have to wonder how important those jobs were in the first place,” he said.

--With assistance from Jana Randow and Zoe Schneeweiss.

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net, Fergal O'Brien

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