Germans backing Donnery to head ECB watchdog

GERMANY is backing the deputy governor of the Central Bank, Sharon Donnery, as the next chief of the ECB banking watchdog, hoping she will be tough on tackling bad loans in countries such as Italy, a source close to the Berlin government said.

The ECB is looking for a banking expert to replace the head of the single supervisory mechanism (SSM), Danièle Nouy, when her term expires at the end of this year, and to oversee a sector weighed down by bad loans and shrinking profit margins.

Ms Donnery already leads an ECB taskforce charged with bringing down the eurozone’s trillion-euro problem of soured credit inherited from the financial crisis and concentrated in southern Europe.

Last week, she became the first person to declare her candidacy to take over at the SSM. Berlin is hoping to rally other countries behind Ms Donnery to rival likely Italian candidates such as Andrea Enria, chairman of the European Banking Authority, or ECB supervisor Ignazio Angeloni, the source said. Supporting Ms Donnery, rather than pushing for its own candidate, would make it easier for Germany to aim for higher-profile roles due to come up in the EU over the next year, including the heads of the EC and the ECB itself. In addition to her credentials as a banking watchdog, Ms Donnery fits the push to have more women at the helm of EU institutions. While the top SSM position is already held by a woman, appointing Ms Donnery would maintain the status quo. All the other possible candidates floated so far are men. Insiders say the appointment of Ms Donnery would reduce the chances of Central Bank governor Philip Lane becoming the ECB’s next chief economist.