Bank of France Race Said to Intensify With ECB in Suspense

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The Banque de France in Paris.

The Banque de France in Paris.

hotographer: Fabrice Dimier/Bloomberg

The race for the Bank of France governorship might be entering its final straight.

While economists have long seen European Central Bank official Benoit Coeure as the lead contender to succeed Christian Noyer later this year, others are waiting in the wings. Francois Villeroy de Galhau, a BNP Paribas SA executive, may also be a candidate, according to two euro-zone central bank officials who spoke on condition of anonymity. He has just been appointed to lead a French investment mission.

The twists follow months of suspense on who French President Francois Hollande will select to replace one of the longest-serving members of the ECB’s Governing Council for his coveted seat at the helm of a Group of Seven central bank. With the ECB embarking on an unprecedented 1.1 trillion euro ($1.2 trillion) bond purchase program in the face of resistance from Germany, the strength of representation from the euro area’s second largest-economy is critical.

“It’s difficult to overstate the importance for France of its ability to weigh in the debate at the ECB,” said Nicolas Veron, a fellow at the Brussels-based Bruegel research group. “Given his background, his experience and his unique skills, Coeure is in a position to have influence on behalf of France that Villeroy de Galhau might not.”

Coeure, 46, is ECB President Mario Draghi’s closest lieutenant, with a portfolio that includes implementing quantitative easing and dealing with the region’s biggest headache, Greece. Like Noyer, former ECB President Jean-Claude Trichet and French central-bank officials going back decades, Coeure was drawn from the French treasury.

Banking Career

Villeroy de Galhau, 56, also worked in the top ranks of the French finance ministry, eventually as chief of staff for former Finance Ministers Dominique Strauss-Kahn and Christian Sautter between 1997 and 2000.

From 2000 he was director general for taxes before joining the consumer credit arm of BNP Paribas in 2003. He became head of retail banking and took a seat on the lender’s executive committee in 2008 and is now chief operating officer. The bank is France’s largest and is supervised by both the Bank of France and, since last year, the ECB.

“Villeroy de Galhau does have the credentials,” Veron said. “Inevitably questions will be raised about his private sector background.”

Villeroy de Galhau will leave BNP Paribas to take up a role leading a mission on investment in France and Europe, the French government said in a statement on Tuesday.

Succession Battle

“A useful financial sector is all about serving the strengths of European economies and societies,” Villeroy de Galhau said in an internal BNP memo obtained by Bloomberg. “Our contacts throughout France and Europe will remain the most precious of my memories” at BNP Paribas, Villeroy de Galhau wrote.

Speculation among officials on the Bank of France succession battle has previously focused on possible candidates to replace Coeure in Frankfurt. Should Coeure leave his ECB executive board role, Hollande would be in a position to propose another candidate to replace him.

Laurence Boone, the Socialist president’s economic adviser since last year, and Claire Waysand, chief of staff to Finance Minister Michel Sapin, are two names previously mentioned by officials in regard to that role. While France isn’t guaranteed a seat, it has almost always had one of its nationals on the Executive Board.

Noyer will reach the legal age limit for French civil servants in October when he turns 65, in the final month of his current term. He would require special dispensation to stay on in his job.

Spokesmen for Hollande’s office didn’t reply to requests for comment. Bank of France officials declined to comment. Villeroy de Galhau will leave his position at BNP by the start of May, said Carine Lauru, a spokeswoman for the Paris-based bank.

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