French banks oppose European reform project on executive appointments

For the European Central Bank (ECB), this is a flaw in the single banking market: the conditions for appointing bank managers still vary from one country to another in Europe. In some cases, the national supervisor is consulted upstream (“in ante”) of the appointment of the manager. In others, it is consulted a posteriori (“ex post”).

As part of a proposal for a directive currently under discussion, the European Commission is therefore proposing to establish a single standard within the European Union (EU) by giving the ECB a kind of “ex ante” veto right. . The proposal is welcomed with reservations by France, Germany and Italy, which apply the “ex post” rule.

“The aim is to ensure that members of the management of banks are held to the same standards of conduct, experience and reputation in all EU countries”, explains Frank Elderson, the number 2 of supervision banking in the euro zone, on the ECB blog. “This will make our banks stronger and our supervision less complex and therefore more effective. »

“fit and proper”

The European supervisor, who supports the Commission’s proposal, wants to ensure that the members of the management committees and boards of directors of the banks are beyond reproach, both in terms of competence and respectability (“fit and proper in the jargon).

“The ECB still plays a gatekeeper role in this area, but we are hampered by the patchwork of different national rules,” said Frank Elderson. This project to harmonize the rules is however strongly rejected in some Member States, starting with France.

“The ex post evaluation system […], has proven itself, reacts the French Banking Federation (FBF): it avoids job vacancies and no malfunction justifies a change of model. This therefore risks leading to a very cumbersome system for the renewal of managers and executives, the promotion of diversified profiles, with the risk that future appointments will preferably go to people already validated by the ECB. »

For French banks, the change would risk extending the appointment process, which is already cumbersome, by several months, but also having a strong impact on mutualist groups. Managers of local savings banks should potentially be subject to the same rules. “The ECB agrees that a proportionate approach is needed here,” replies Frank Elderson, however.

In other words, the ECB would focus on so-called systemic banks, such as BNP Paribas or Société Générale.

National or European jurisdiction

The reservation of France and other countries does not only relate to the supervision sequence, but also to the transfer of competence from the national supervisor to the European supervisor. In France, the Prudential Control and Resolution Authority (ACPR), in charge of supervising banks and insurance and attached to the Banque de France, would thus lose an important lever of power.

Frankfurt, however, plans to work hand in hand with the national authorities. The Banque de France declined to comment.

This measure is part of a “banking package” (draft European directive, new rules, etc.) which aims to implement the last part of the so-called Basel 3 reforms. yet to be discussed by the European Parliament and the Council of EU Heads of State and Government.

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