Sharon Donnery tipped for top EU watchdog job

Sharon Donnery of the Central Bank is among three of Europe’s highest profile female central bankers who are emerging as strong candidates for the race to succeed Andrea Enria as the bloc’s top bank watchdog, potentially bringing a woman to the job for the second time.

Likely names on a shortlist due later this year include Bundesbank vice-president Claudia Buch, Bank of Spain deputy governor Margarita Delgado and Ms Donnery, a deputy governor at the Central Bank, according to central bank officials.

While no one has formally thrown their hat in the ring, the officials – some of whom will be involved in picking the candidate – cited Ms Buch, Ms Delgado and Ms Donnery among the most likely contenders. They asked to remain anonymous because the process has yet to begin.

Their views underscore how much the bench of talent has broadened in recent years as the European Central Bank makes headway in increasing the share of women in leadership positions, with president Christine Lagarde the most prominent.

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The chair of the ECB’s Supervisory Board is the euro zone’s most senior banking regulator, directly overseeing the bloc’s major banks and endowed with a powerful voice to help shape rules that determine the industry’s structure. Whoever wins the job will contend with bankers who are chafing at what they regard as excessively intrusive oversight as they seek to lift share prices that have been battered since the 2008 financial crisis.

There are other potential candidates and there’s no guarantee the next pick will be a woman, the officials said. Representatives of the three national central banks declined to comment, as did an ECB spokesman.

Mr Enria is scheduled to step down when his five-year non-renewable term ends in December. Back when he won the job in 2018, the Italian was up against Ms Donnery and Frenchman Robert Ophele. His predecessor, Daniele Nouy, was a woman from France.

Ms Donnery oversees banks and insurers at the Central Bank, but on the European level she’s better known for formerly leading the ECB’s taskforce on non-performing loans. Back in 2017 the ECB was criticised by banks and some politicians for allegedly overstepping its mandate based on that group’s work. Yet Ms Donnery’s tough tack helped European banks shrink their mountain of bad debt and set them on a more stable footing.

Ms Buch is an economist rather than a regulator, yet she has taken hawkish positions when it comes to forcing banks to build up capital to prepare for economic downturns. She is the only one of the trio not to sit on the ECB’s Supervisory Board, which meets every three weeks to discuss, plan and carry out oversight.

Ms Delgado probably has the best grasp of the ECB’s inner workings, having previously served as a deputy director general in the supervisory arm. She defended the ECB’s restrictions on bank dividends during the pandemic, one of its most controversial actions to date. Yet she has also acknowledged banking overseers’ limits, saying in a 2021 interview with Bloomberg that regulators should not be used as a tool for climate policy.

Mr Enria drew the ire of bankers for the de facto ban on payouts as well as rigorous scrutiny of risks the ECB says they face. Yet he also offered the industry regulatory flexibility in the pandemic, worked to integrate Europe’s patchwork of banking markets and has given lenders transparency on issues such as how the ECB treats mergers and acquisitions. – Bloomberg