Bloomberg News

Germany Risks Losing Manager Post at EU Bank Stress-Test Agency

June 09, 2011

June 9 (Bloomberg) -- Germany’s financial supervisor risks losing its seat on the managing committee of the European Banking Authority, days after Bafin’s chairman criticized the “legitimacy” of the agency overseeing stress tests on lenders.

Bank watchdogs from across the European Union are scheduled to vote as soon as this month on a replacement for Bafin’s Sabine Lautenschlaeger, who must step down from her role at the EBA because she agreed to join the Bundesbank. The EBA’s six- person managing committee helps decide the agency’s annual work plan and includes supervisors from the Czech Republic, Finland, France, Hungary and Sweden.

“It’s true that Lautenschlaeger now loses her seat and that it won’t automatically go to a new German candidate,” Bafin spokesman Ben Fischer said.

Bafin Chairman Jochen Sanio this week lashed out at the EBA, the agency carrying out this year’s European Union stress tests, saying the regulator lacks “clear, defined corporate- governance structures, which alone could guarantee process legitimacy.”

The EBA, which took over from the Committee of European Banking Supervisors at the start of the year, is responsible for the EU’s bank stress tests. Under the terms of this year’s exam, 91 banks will be expected to maintain a Core Tier 1 capital ratio of at least 5 percent, the EBA has said.

The regulator has disallowed lenders counting in their results some types of non-voting capital, known as silent participations, which are permitted under German rules.

The EBA created its capital definition for the stress tests without “legal, defined competence,” Sanio said.

An association of German public sector banks also criticized the tests in April, saying they would put them at a disadvantage and convey false signals to the market.

Lautenschlaeger, whose departure from Bafin triggered the EBA vote, was nominated by the government earlier this year to become a board member of Germany’s central bank.

--Editors: Peter Chapman, Anthony Aarons

To contact the reporter for this story: Ben Moshinsky in London at bmoshinsky@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.


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