The European Central Bank (ECB) has advertised for a new bank supervisory chief, looking for an expert to oversee a bloated and inefficient sector that is still weighed down by the legacy of the bloc's debt crisis.
The job ad published on the ECB website on Monday formally launches the process to replace France's Daniele Nouy, whose five-year term ends on December 31st.
Ms Nouy, in the role since 2014, set up the Single Supervisory Mechanism from scratch but struggled at times to push through proposals to clean up the sector in the face of intense lobbying from southern European nations, particularly Italy.
While no candidate has formally expressed interest, media reports have mentioned European Banking Authority chair Andrea Enria, ECB supervisor Ignazio Angeloni, Central Bank of Ireland deputy governor Sharon Donnery and former Dutch supervisor Jan Sijbrand and potential candidates.
Although it is up to individuals to make their application, no candidate is likely to succeed without their home government’s approval and a direct lobby effort among euro zone members.
In 2017, Nouy’s basic salary was €283,488 which is the same as the pay of regular ECB board members.
While Germany could also field a qualified candidate, it is unlikely to do so as that would probably rule out Bundesbank president Jens Weidmann from the race to replace ECB chief Mario Draghi next year since two Germans heading the ECB's two distinct arms would be politically contentious.
The new supervision chief will have to oversee 118 of the euro zone’s biggest lenders with around €21 trillion in assets and a still large pool of non-performing loans (NPLs) left from the bloc’s debt crisis, which nearly ripped the currency union apart.
Indeed, Ms Nouy has struggled to tackle the problem of soured debt as banks in Italy have pushed back against plans for aggressive action to sell bad loans or build provisions.
Salvaging a compromise after months of delay, the ECB last week published new guidelines which spelled out that banks with a bigger stock of NPLs would be given more time and no uniform provisioning rules would be imposed.
Bank are also struggling with weak profitability with the sector earning return on equity of just 6 per cent in the last quarter of 2017, with many not even earning the cost of their equity.
Still, lenders have built massive capital buffers, suggesting that they already have adequate reserves to withstand an economic downturn.
An ECB committee will draw up a shortlist of candidates from the applicants and will make a final proposal to the EU Council in the autumn after consultation with Parliament and the Council, among others. – Reuters