Villeroy Cleared to Become Next Governor of Bank of Franceby and
Former-BNP executive says there won't be conflict of interest
Incumbent Christian Noyer to retire at the end of October
Francois Villeroy de Galhau, a former top executive at BNP Paribas, was cleared by French lawmakers to become the next governor of the Bank of France.
A majority of lawmakers on the finance committees of France’s National Assembly and Senate voted Tuesday to support the nomination of Villeroy, 56, to take over the job when Christian Noyer retires at the end of next month.
The votes of support came after Villeroy faced tough questioning on Tuesday from lawmakers concerned that his ties to France’s largest bank could color his judgment. He spent 12 years at BNP, joining the executive committee in 2008 and becoming chief operating officer in 2011 before leaving this year.
To allay those concerns, Villeroy promised to abstain from decisions involving BNP Paribas until 2017 and said that he no longer has any financial interest in the lender.
“This question of independence is legitimate and I take it seriously,” Villeroy said at the hearing. “First of all, I want to guarantee that there will never be a situation of conflict of interest.”
The job comes with a seat on the European Central Bank’s Governing Council, which as well as setting monetary policy for the 19-nation euro area is responsible for supervision of the region’s largest lenders, including BNP. He would serve for a six-year term, renewable once.
Answering lawmakers’ questions, Villeroy said abstaining on decisions involving BNP won’t have a significant impact on his job.
“The current functioning of the Bank of France is that there is very little, almost no decision that comes to the governor” on these matters, he said. “Christian Noyer didn’t have to make an individual decision on BNP Paribas, with one exception -- the U.S. fine.”
BNP was ordered last year to pay a record $8.97 billion penalty to settle a criminal case over charges it violated U.S. sanctions by processing transactions involving Sudan, Iran and Cuba. The bank admitted it engaged in a conspiracy from 2004 to 2012 to violate embargoes imposed on the three nations designated as state-sponsors of terrorism.
The 56 year-old Frenchman is not the first central banker to have come from a private-sector lender. ECB President Mario Draghi is an alumnus of Goldman Sachs Group Inc. and Bank of England Governor Mark Carney spent 13 years at the same firm with postings on three continents.
Villeroy will be the second Frenchman in the 25-member ECB Governing Council, together with Executive Board member Benoit Coeure, who had also been tipped for the Bank of France job. Villeroy said he will “work well” with Coeure.
“I believe the active monetary policy currently being implemented by Mario Draghi is the right one to bring inflation close to 2 percent,” Villeroy said at the hearing. “Reforms are necessary in every country, including ours,” he added.