Nov. 1 (Bloomberg) -- The European Central Bank may win powers to fire executives at lenders if they fail to meet ethical standards as part of plans to make the ECB a bank supervisor.
Updated proposals drawn up by Cyprus, which holds the rotating European Union presidency, also call for the ECB’s bank supervisory board to be run by a “full-time independent professional” who doesn’t hold a position with a national regulator, according to a copy of the plans obtained by Bloomberg News.
The ECB should be empowered “to remove the members of the management body of credit institutions who do not fulfill the requirements set out in relevant acts of Union law,” according to the proposals.
Governments in the 27-nation EU are racing to meet a year-end deadline for making the ECB the chief supervisor for euro-area banks, as this would allow lenders to receive direct aid from the bloc’s bailout fund. Leaders last month renewed their commitment to give the ECB oversight powers over all banks in the currency union as well as in other European nations that choose to participate.
The proposals also seek to ease concerns expressed by non-euro area nations, including Sweden and Denmark, that they might be marginalized if they sign up for ECB supervision, because they aren’t allowed to have a voice on the central bank’s Governing Council. EU treaties require the ECB’s Governing Council to make all final decisions for the central bank.
Under the revised plans, the governing council would have three weeks to object to decisions prepared by the supervisory board, on which participating non-euro area nations would be represented. Should no objections be raised within that time, the decision would be adopted automatically.
“The Presidency is working intensely on finding solutions to some remaining issues,” Stefaan De Rynck, a spokesman for Michel Barnier, the EU’s financial services chief, said in a message. It is important that national governments find a “common understanding soon so that discussions with the European Parliament can be taken forward.”
No one was immediately available to comment at the ECB.
The plans also call for the ECB to reach memoranda of understanding with regulators in EU nations that stay outside the single supervisory system.
The U.K., the EU’s largest financial center, has said that it won’t sign up to ECB oversight.
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