Buch Wins ECB Backing to Run Bank Watchdog After Enria’s Era

Bundesbank official Claudia Buch won backing from European Central Bank policymakers to take charge of supervising lenders across the 20-nation euro zone.

(Bloomberg) — Bundesbank official Claudia Buch won backing from European Central Bank policymakers to take charge of supervising lenders across the 20-nation euro zone. 

The 57-year-old economist was chosen over Bank of Spain Deputy Governor Margarita Delgado by the Governing Council in Frankfurt on Wednesday, according to a statement.

Buch, who is vice president of the German central bank, will now run the gauntlet of European Parliament scrutiny before governments can sign off on her appointment for when Andrea Enria concludes his five-year non-renewable term on Dec. 31. 

Lawmakers can still reject her nomination, and could yet choose to do so after the ECB disregarded the findings of their Economic and Monetary Affairs Committee, known as ECON. The panel described Delgado, a veteran supervisor both in Frankfurt and at the Bank of Spain, as more qualified. 

“There is little doubt that Claudia Buch is a highly qualified candidate with the right skill set to lead the Single Supervisory Mechanism,” said Markus Ferber, who sits on the committee for the largest political group in Parliament and is from Germany.

If confirmed as chair of the SSM, Buch will contend with the potential fallout from rising interest rates and a push by banks to boost shareholder payouts, as she takes on an institution in the throes of change. “It is somewhat surprising that the ECB opted not to follow the ECON Committee’s recommendation. This makes the process more complicated than it needs to be.”

In an interview with Bloomberg last week, Enria outlined the biggest overhaul of the watchdog since it started overseeing lenders almost a decade ago.

Buch’s selection would contrast with her two predecessors: both Enria and the institution’s first chief, Daniele Nouy, specialized in bank oversight early on in their careers, while Buch spent years as a member of Germany’s Council of Economic Experts advising the government.

She still brings plenty of relevant experience, having served as the Bundesbank’s official in charge of financial stability and supervision. Buch has been vice president there for almost a decade, a pedigree of board-level service that exceeds that of Delgado.

Parliament View

The Spaniard was endorsed in July by the ECON committee in a letter to ECB President Christine Lagarde that followed scrutiny hearings. 

Bloomberg reported last week that lawmakers were questioning why that correspondence hadn’t been circulated to give policymakers a complete view of the candidates.

“The views of the ECON Coordinators were shared with the Governing Council,” the ECB said.

The secret ballot of policymakers produced a majority in favor of Buch, according to the statement.

The Parliament has previously held up or even blocked appointments to key roles. One recent example was its rejection of Irish central bank official Gerry Cross to help run the European Banking Authority on concerns about his past work for a finance industry lobby group. 

“I already heard some lawmakers very displeased by the way this has unfolded and I cannot rule anything out,” Eva Maria Poptcheva, an ECON vice-chair, said in an interview. “It isn’t so much about the individual candidate, but is really about the inter-institutional relations and the role of the European Parliament that we don’t like to see diminished this way.”

The SSM selection is playing out against the backdrop of horse-trading between European Union countries competing to place their nationals atop several major institutions. 

That may have aided Buch, since picking Delgado might have raised the prospect of giving Spain too many positions just as Deputy Prime Minister Nadia Calvino vies to lead the Luxembourg-based European Investment Bank.

–With assistance from Zoe Schneeweiss, Alonso Soto, Kamil Kowalcze and Alexander Weber.

(Updates with comment from lawmaker in third to last paragraph)

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