Claudia Buch nominated for role of eurozone’s chief banking supervisor

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Claudia Buch, the deputy head of Germany’s Bundesbank, is set to become the eurozone’s top financial supervisor after the European Central Bank put her forward to become the next chair of its banking watchdog.

Buch was one of two candidates — along with Bank of Spain deputy governor Margarita Delgado — who was on the shortlist to replace Andrea Enria as the chair of the Single Supervisory Mechanism when he steps down at the start of next year.

Buch could bring a tougher approach to banking supervision after she told the Financial Times in an interview in July that there was a need for a more “critical mindset” in overseeing the sector and warned it still faced significant risks from recent macroeconomic upheaval.

The German deputy governor’s nomination, which still needs to be approved by EU leaders and the European parliament, forms part of a series of appointments to top financial jobs in the region this year.

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The rejection of Delgado’s candidacy would boost the chances of Spain’s deputy prime minister Nadia Calviño in the race to be the next head of the European Investment Bank, the world’s largest multilateral lender.

Calviño is already the frontrunner for the EIB role, according to diplomats and officials involved in discussions about the appointment. Former EU competition commissioner Margrethe Vestager is Calviño’s most prominent rival. EU finance ministers are set to discuss the EIB candidates at an informal meeting in Santiago de Compostela that begins on Friday.

Spain has key positions in other EU institutions, including ECB vice-president Luis de Guindos and European Banking Authority chair José Manuel Campa, although the latter’s term expires in March next year.

Meanwhile, Germany’s share of top EU jobs is declining after Klaus Regling stepped down as chair of the European Stability Mechanism, the bloc’s bailout fund, while Werner Hoyer’s term as chair of the EIB expires at the end of this year.

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The single supervisory mechanism was created in 2014 to harmonise the supervision of banking across the currency bloc in response to the region’s sovereign debt crisis a decade ago. It oversees the bloc’s 110 biggest and most systemically important banks.

Enria angered many banks by recommending they did not pay dividends or buy back shares after the pandemic hit in 2020 and he has since admitted that the ECB overestimated the size of bad loans that would stem from the lockdowns to contain the virus.

The eurozone banking system has so far proved more resilient to the sharp rise in interest rates than the US or Swiss sectors, which have had several failures. But the EU’s external auditor criticised the ECB for being too lax in supervising banks and insufficiently aggressive in pushing to reduce stockpiles of bad loans left from the eurozone debt crisis a decade ago.