ECB Faces Brexit Bank Influx With Holes at Oversight Arm

Updated on
  • Director General Jukka Vesala has resigned from SSM post
  • Two out of four ECB posts on supervisory board are vacant

The European Central Bank’s loss of one of the four career officials managing its supervisory arm adds to a swelling vacancy list at the top of the bank watchdog just when its workload is set to increase.

Jukka Vesala, one of a quartet of director generals at the helm of the Single Supervisory Mechanism, has resigned, the Frankfurt-based ECB said on Thursday. His exit follows the expiry of Julie Dickson’s term as a member of the institution’s Supervisory Board in July, and the death of her colleague Luc Coene in January. Neither has been replaced.

Vesala is the first director general to quit since the supervisor -- a key pillar of the euro area’s response to the sovereign debt crisis -- went live in November 2014 after a one-year hiring frenzy. That leadership gap is swelling just as the institution prepares to scale up its oversight capacity for banks settling in the region in the wake of the U.K.’s exit from the European Union, and as officials intensify controversial efforts to clean up an existing legacy of bad loans on bank balance sheets.

Dickson’s three-year contract ended in July, and she joined the board of the Dubai Financial Services Authority in September. The ECB’s Ethics Committee waived a customary cooling-off period “given the regulatory and oversight objectives of the DFSA,” according to the ECB.

Cooling Off

Vesala will take a six-month cooling-off period, some of which will be spent working for the chief services officer of the ECB. He led the Micro-Prudential Supervision III department, which focuses on smaller banks, for which national authorities are directly responsible. During his tenure, several such lenders have failed in countries such as Italy under a weight of souring loan books. Vesala declined to comment on his departure.

Linette Field, Vesala’s deputy, has taken over as acting director general with immediate effect, according to the ECB.

An ECB spokesman declined to comment on the vacancies on the SSM’s board.

The central bank has managed to fill vacancies at its banking supervision arm in the past. Sirkka Haemaelaeinen, who left the ECB’s supervisory board last year for personal reasons, was replaced by fellow Finn Pentti Hakkarainen.

The SSM is led by chairwoman Daniele Nouy and her deputy Sabine Lautenschlaeger, who also sits on the Executive Board of the ECB’s monetary-policy arm. They preside over a 32-seat board which includes members of national supervisors from euro-area countries.

The ECB appoints four board members but, in the absence of Dickson and Coene, only two of those positions are now filled. The ECB’s other two board members are Ignazio Angeloni, an Italian, and Hakkarainen.

— With assistance by Alessandro Speciale, and Kati Pohjanpalo

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