Who's new on the Board

The ECB names three new Supervisory Board members

Three seats filled

Earlier this spring the ECB invited applications for three new members of the Supervisory Board. You can see my brief description of the positions here:

These vacancies have now been filled. This week, the ECB announced the appointment of Sharon Donnery, Pedro Machado and Patrick Montagner as the new ECB Representatives on the Supervisory Board. They will succeed Kerstin af Jochnick, Edouard Fernandez-Bollo and Elizabeth McCaul whose terms expire in the coming months.

New Members

As you would expect, the three new Board members all bring significant experience of supervision and of working in European institutions.

Donnery is currently Deputy Governor responsible for supervision at the Central Bank of Ireland (and in that capacity represents Ireland on the ECB Supervisory Board). Machado is Director of Resolution Planning at the Single Resolution Board and a former chief legal counsel at the Bank of Portugal. Montagner is perhaps the odd one out, being head of insurance supervision at the French Prudential Supervision and Resolution Authority (ACPR) and a member of the board of the European Insurance and Occupational Pensions Authority (EIOPA).

Established Patterns

So far, then, so conventional. Indeed, (and unsurprisingly) all ECB Representatives so far have previously been senior supervisors at national or European level. This graphic shows past and current Supervisory Board Chairs, Vice-Chairs and ECB Representatives with their times in office:

Continuities and Differences

That said, the latest appointments show some interesting departures from past practices, as well as continuities.

All European

First is that the ECB has broken with its previous pattern of appointing one non-European as ECB Representative. Until now, the Supervisory Board has almost always benefited from a non-European perspective, from first Julie Dickson (Superintendent of Financial Institutions in Canada from 2007-2014) then Elizabeth McCaul (New York State Superintendent of Banks from 2000-2003). That tradition of having a non-European voice at the table appears to have come to an end.

All Official

McCaul’s departure also means the Supervisory Board will lose the member with the most extensive private sector experience. Unusually among her fellow ECB Representatives, McCaul came to Supervisory Board after more than 15 years at Promontory Financial Group as well as an earlier stint at Goldman Sachs. None of the new appointees can match this level of experience in the private sector (though Machado spent 2 years working for a Big 4 consultancy in the 2010s).

All Western

At the same time the new appointments maintain an apparent bias towards western Europeans at the centre of the Supervisory Board. So far, 15 people have served as ‘ECB members’ of the Supervisory Board (i.e. Chair, Vice-Chair, ECB Representatives). The breakdown of nationalities is:

• Finland: 3 (Hämäläinen, Hakkarainen, Tuominen)

• France: 2 (Nouy, Fernandez-Bollo)

• Germany: 2 (Lautenschläger, Buch)

• Italy: 2 (Enria, Angeloni)

• Belgium: 1 (Coen)

• Luxembourg: 1 (Mersch)

• Netherlands: 1 (Elderson)

• Sweden: 1 (af Jochnick)

• Canada: 1 (Dickson)

• USA: 1 (McCaul)

The new appointments continue this western- (and Nordic-) centric trend (as well as ‘promoting’ France to joint first place).

Implications

Overall, it is possible to see Donnery’s, Machado’s and Montagner’s appointments as slightly narrowing the range of experiences - and potentially perspectives - at the core of the Supervisory Board. How far this will be reflected in actual supervisory decisions and priorities remains to be seen. But banks will certainly hope that their supervisors succeed in avoiding the groupthink that in its work on governance the ECB has repeatedly warned against.