The race to take over the European Central Bank’s supervision arm has become a dead heat as southern European countries appear to be lining up behind an Italian candidate, four sources familiar with the process said.
Ireland’s Sharon Donnery was earlier seen as the favorite but Italy’s Andrea Enria has garnered significant support in recent weeks, suggesting that the vote, to be taken in a secret ballot by ECB policymakers on Wednesday afternoon, will be close, the sources told Reuters.
Donnery, the Irish central bank’s deputy governor, and Enria, the head of the European Banking Authority, are both seen as highly qualified but Enria’s candidacy appears to have gained some momentum, the sources, who asked not to be named, said.
Donnery, a key architect of the ECB’s drive to reduce the bank sector’s non-performing loans, is favored by many in the northern European countries because of her tough stance.
But since the problem of nonperforming loans affects mostly southern banks, especially in Italy and Greece, that same stance has alienated southern countries who fear that any further aggressive moves to reduce bad debt would force banks to raise more capital, depressing their valuation even further and possibly leaving them open to takeovers. [Reuters]