Central Bank deputy governor Sharon Donnery has been beaten by an Italian economist in a competition to become the next chair of the European Central Bank's (ECB) banking supervision arm.
However, the result of the ballot by members of the ECB governing council on Wednesday has boosted the odds of Central Bank governor Philip Lane securing an executive position at the Frankfurt-based organisation next year – as well as Ms Donnery's chance of succeeding him in Dublin.
A majority of Governing Council members voted in favour of Andrea Enria, currently the head of the European Banking Authority (EBA), being installed as the Single Supervisory Mechanism's (SSM) chairperson from January for five years, succeeding the outgoing head, Danièle Nouy.
The appointment still needs to be ratified by the European Parliament and euro zone governments, the ECB said in a statement, confirming Mr Enria's nomination.
Ms Donnery (46) surprised Government officials when she put her name forward in August to lead the SSM, as Minister for Finance Paschal Donohoe is eyeing an ECB executive seat for Mr Lane as the institution's chief economist, Peter Praet, retires next May.
The Republic is the only founding member of the euro zone not to have held an executive board position at the ECB, and sources had previously indicated that it would be unlikely for a small euro zone country to secure two top ECB roles at the same time.
Mr Donohoe pulled Prof Lane as a candidate for the vice-presidency of the ECB in February as the only other person in the race, Spain’s then economy minister Luis de Guindos, had lined up more votes among European colleagues.
Withdrawal
The withdrawal was said at the time to count in favour, politically, of the Republic securing the next executive ECB position, particularly as Prof Lane's technical expertise had shone through when both candidates made presentations in February to the European Parliament's Economic and Monetary Affairs Committee.
It is important that Irish officials of the highest calibre go forward for these important international positions
Government sources have said in recent weeks that Ms Donnery, who had long been hotly tipped as a successor to Prof Lane, would have boosted her chances to become the first woman governor of the Central Bank in the event that she was beaten in the SSM race.
“The fact that Sharon Donnery was one of the final two candidates for this important position reflects her deep knowledge of, and experience in, financial regulation, and the high esteem in which she is held across Europe,” Mr Donohoe said on Wednesday evening. “I also want to thank Sharon for putting her name forward for the role. It is important that Irish officials of the highest calibre go forward for these important international positions.”
Prof Lane told senior staff in an internal message that Ms Donnery reaching the final round of the competitive process “is apt recognition of her career achievements and her capacity to lead at the highest levels”.
Members of the Economic and Monetary Affairs Committee, who grilled both remaining SSM candidates last month, highlighted in a subsequent letter to ECB president Mario Draghi that Ms Donnery's gender counted in her favour as the ECB strives to promote diversity, Bloomberg reported earlier this week.
International network
The letter, written by the committee's chairman, Roberto Gualtieri, noted Mr Enria's international network and almost nine years of experience in charge of the EBA, which drafts technical standards for regulating lenders.
On the other hand, Ms Donnery, an economist who joined the Central Bank in 1996, has led the SSM’s taskforce on tackling non-performing loans (NPLs) since late 2015, drawing on Ireland’s experience in tackling soured debt in the wake of the financial crash.
There had also been concerns in some European capitals about Mr Enria, as SSM chair, being ultimately responsible for resolving NPLs across the euro zone, as his native Italy is home to the biggest bad-loans problem.
A number of changes at the top of the ECB in the near future will culminate in the scheduled departure of Mr Draghi at the end of next year.
