Friday 20 September 2019

Coveted role in ECB comes into focus for keen photographer Donnery

Sharon Donnery originally joined the Central Bank in 1996 as an economist, and progressed through a series of senior roles
Sharon Donnery originally joined the Central Bank in 1996 as an economist, and progressed through a series of senior roles

Dearbhail McDonald, Group Business Editor

On Monday the governing council of the European Central Bank (ECB) - the euro area's fiercely-independent central bankers - will cast secret ballots to decide who will be the next chair of the Single Supervisory Mechanism (SSM).

Ireland's Sharon Donnery is one of two remaining candidates - and is seen by many as the front runner. If she gets the job the deputy governor of the Irish Central Bank will become the most powerful Irish person ever in the European banking system.

The SSM was created in the aftermath of the financial crash, with a mandate to prevent a repeat of the devastating banking crisis.

The chairman role of the SSM, set to be vacated in December by Daniele Nouy, is one of the most coveted jobs in eurozone regulation.

This week two names, Sharon Donnery and Andrea Enria, the man who heads Italy's European Banking Authority, were forwarded to the ECB's 25 governors by the European Parliament's Committee on Economic and Monetary Affairs.

The two names were forwarded after three candidates were interviewed in private session by the committee.

Although the MEPs did not express a particular preference - both candidates did well - Ms Donnery is reportedly the preferred candidate of Mario Draghi, the powerful and at times provocative President of the ECB. Parliamentarians in Berlin are also keen to have another woman replace Ms Nouy, such is the lack of senior female leaders in many EU institutions - including the ECB.

Ms Donnery is a familiar face at the ECB where, in addition to her NPL role, she serves as chair of its budget committee (Bucom), represents Ireland at the European Systemic Risk Board (ESRB) and also serves as alternate governor on the governing council of the ECB.

Ms Donnery, a keen and accomplished amateur photographer, prefers life behind the lens and as far away as possible from the glare of publicity.

But don't be fooled: behind her quiet demeanour is a strong capability - and a steely resolve.

One of the reasons why Italy - whose bad loans are keeping many regulators awake at night - is resisting Ms Donnery's appointment is a fear that she will go to hard on the region's banks.

But that steady, stern hand could be welcomed by the wider governing council of the ECB, given the critical need to clean up bank balance sheets.

A central bankers' central banker, Ms Donnery was appointed as deputy governor of the Central Bank in Ireland in March 2016.

She originally joined the Central Bank in 1996 as an economist, and progressed through a series of senior roles, including Director of Credit Institutions and Registrar of Credit Unions. The married mother of two has also served as vice-chair of the European Banking Authority's standing committee on consumer protection and financial innovation.

At home, she avoided being caught up in the €1bn tracker mortgage scandal that has blighted the term of her boss Philip Lane, Governor of the Central Bank of Ireland. In fact, Ms Donnery has a strong record in consumer protection. At the height of the financial crisis, she raised concerns about consumers, asking the government in 2011 to allow the Central Bank to regulate vulture funds amid fears that unregulated funds buying mortgage books would treat borrowers unfairly.

The plea fell on deaf ears at the time, but the government was later forced into a U-turn. Credit services firms are now subject to the Central Bank's code of conduct on mortgage arrears, but would consumers have enjoyed better protection had the government acted on Ms Donnery's concerns when those concerns were first raised?

Ms Donnery, who has impressed in her role as chair of the SSM's NPL group, is highly regarded in Dublin and Frankfurt. She is deemed a natural successor to Mr Lane - who himself is a frontrunner to succeed Peter Praet as the ECB's chief economist when he steps down next June.

If Ms Donnery got the SSM chair role, it would not debar Mr Lane from becoming the ECB's chief economist. But it's hard to see Ireland securing two top roles.

If Ms Donnery is not appointed, the experience (the ECB tends not to disregard candidates that have come through the parliamentary process) means she has affirmed her top table status.

The gruelling process and the profile that has come with the race, puts her in good stead to succeed Mr Lane should he head to Frankfurt instead.

Even if she loses out, Ms Donnery emerges looking like a winner.

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