Constancio Says ECB to Hire More Than 500 for Supervision

Photographer: Kiyoshi Ota/Bloomberg

ECB Vice President Vitor Constancio said the European Central Bank will hire more than 500 new staff before it takes over banking supervision. Close

ECB Vice President Vitor Constancio said the European Central Bank will hire more than... Read More

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Photographer: Kiyoshi Ota/Bloomberg

ECB Vice President Vitor Constancio said the European Central Bank will hire more than 500 new staff before it takes over banking supervision.

The European Central Bank will hire more than 500 new staff to adapt to its new role as banking supervisor, ECB Vice President Vitor Constancio said.

“I would say it would have to be slightly above 500, but not reaching 1,000,” Constancio said in an interview with Bloomberg Television in Frankfurt today. “This has to be now fully analyzed in detail after the very recent decisions.”

European Union finance ministers this week agreed to put the ECB in charge of all 6,000 euro-area lenders in a deal that paves the way for the currency bloc’s firewall fund to provide direct bailouts to banks. The new supervisor should be operationally ready by March 1, 2014, with 150 to 200 banks automatically overseen by the ECB and the others being moved under the auspices of the central bank if needed.

Until now, the ECB hasn’t published estimates on how many people it might have to hire to fulfill its new obligations. The legal framework that will underpin the central bank’s new role is scheduled for completion by the end of February.

“The recruitment will have to be done mostly from the national authorities, meaning national supervisors or national central banks,” Constancio said, adding that the new hires will be employed by the ECB.

One System

Constancio highlighted that while the ECB at first will only oversee the region’s biggest banks directly, it will be in charge of the entire euro area.

“I’d like to stress that we are talking about one system,” he said. “The Single Supervisory Mechanism was given legal competence over all the banks of participant countries. The supervisory board will have the power to call for centralized supervision for any bank or group of banks.”

Bundesbank President Jens Weidmann today reiterated his doubts that the ECB may not be able to separate monetary policy from overseeing banks. He has called for a change in the European Union treaty to prevent a conflict of interest.

“The ECB is not an obstruction,” Constancio said. “The supervisory board is composed of the heads of supervision of all” participating countries. “So all are there, sitting at the table,” he said. “All the problems will be discussed and decided collectively.”

Deposit Rate

Asked whether the ECB may lower interest rates if economic conditions worsen, Constancio said that “the risks are to the downside and if they materialize as they have done in the past, certainly we will think to adjust our policies to face what will be a different situation.”

The ECB at its policy meeting last week lowered its economic outlook for the euro area and now forecasts the economy will shrink 0.5 percent this year and 0.3 percent in 2013. It left interest rates unchanged at a record low of 0.75 percent for the refinancing rate and zero percent for the deposit rate.

While the Governing Council “has analyzed” moving the deposit rate into negative territory, “we never pre-commit with these things,” Constancio said. “We can do it, we are ready to do it, there is no operational problem, but that does not mean we are going necessarily to decide that.”

To contact the reporter on this story: Stefan Riecher in Frankfurt at sriecher@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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