Donnery bid to lead ECB gains momentum as race intensifies
Sharon Donnery is getting closer to becoming the eurozone's top bank supervisor as she and her two competitors prepare for scrutiny by lawmakers and the European Central Bank.
The deputy governor of Ireland's Central Bank can count on the support of a bloc of ECB policymakers from northern nations when the Governing Council holds a secret ballot next month, according to officials familiar with the matter.
While the European Parliament could be a bigger hurdle because of her tough stance on bad loans, Donnery has momentum over her opponents with her experience and the desire to redress the ECB's gender imbalance, the officials said. They asked not to be named because the process is confidential. An ECB spokesman declined to comment.
The other candidates to succeed Daniele Nouy at the helm of the Single Supervisory Mechanism (SSM) on January 1, overseeing 119 of the currency union's biggest lenders, are two men: Italy's Andrea Enria and France's Robert Ophele.
The SSM chair is the first of four key appointments in the next year that will reshape the leadership of the ECB, including the presidency after Mario Draghi. It's the only one that the Governing Council has a significant role in filling, but the decision is likely to influence how euro-area governments divide up the other spoils.
"Donnery would be seen positively by those who want faster progress on non-performing loans," said Antonella Sciarrone Alibrandi, a professor at the School of Banking, Finance and Insurance at the Universita Cattolica del Sacro Cuore in Milan. "But we need someone who can embody the European interest and avoid further division by not being too aggressive."
The three candidates are likely to face informal hearings at the European Parliament next Tuesday in Strasbourg. The ECB's Governing Council will then need to choose a single nominee, which could happen at its next non-monetary policy meeting on November 7. The selected person must be approved by the parliament before the appointment is signed off by governments.
If Ms Donnery has a weakness, it's probably her views on how fast eurozone banks should reduce their bad debt. She was behind SSM proposals last year which legislators criticised and successfully fought to get watered down. The European Parliament's legal service even accused the ECB of overstepping its supervisory powers.
Another potential hurdle is that if Donnery gets the role, it willl raise question marks over Central Bank Governor Philip Lane's chances of being appointed to the ECB's Executive Board next year. He's considered well-qualified to replace chief economist Peter Praet, but eurozone finance ministers make board appointments and they may balk at allowing a small country like Ireland to hold two senior positions.