| LONDON, July 7
LONDON, July 7 The European Union will soon
begin sharing information on how bankers fare in 'fitness and
probity' tests in member states, making it harder for errant
bankers to evade regulatory scrutiny by crossing national
The European Banking Authority's regulation director Isabel
Vaillant told Reuters that work will begin on the new fitness
and probity database next year, ending the current system of ad
hoc sharing between national authorities.
The database will contain details of national supervisors'
assessments of newly appointed bank directors, senior
management, divisional heads and some other key functions like
In the wake of the global financial crisis, when bankers
were blamed for taking their institutions and in some cases
their national economies to the brink, the register is part of a
wider effort by the EBA to standardise the way countries across
the EU 28 decide which bankers are fit and proper for the job.
The EBA lacks the power to compel countries to set the same
standards for bankers across the EU but has brought in new
guidelines on how countries should evaluate bankers' suitability
and will "name and shame" countries that don't comply, Vaillant
The EBA was given the power to collect the information under
the latest version of new European banking regulations dubbed
"We will build a database here only for the purposes of
this," she said, adding that while the database could not
include information obtained from the police it would include
other information collected by supervisors, including whether
candidates had received the regulatory nod for a role.
All the authorities will have to consult the database when
they are assessing candidates who present themselves for new
roles that are captured by that country's fitness and probity
regime, a group that usually includes directors, senior managers
and heads of major divisions.
National authorities will have to submit information to the
centralised system, but a regulator's refusal to allow a
candidate to take a position in one country will not
automatically mean a rejection in another, Vaillant said.
"It (the result) has to be circumstantiated and
scrutinised," she said. "Why did you have a refusal? Was it
because you were not an investment banker, but a retail banker
in a small bank? Is it because you were not of good repute? This
has more weight, probably, and may ban you everywhere. But you
need to consider the individual case; there is no tick box
Most EU countries have signalled their intention to comply
with the guidelines, and Vaillant hopes they will be implemented
effectively within the next two years.
Though the guidelines are not binding, Vaillant said the
ability to name and shame was a form of policing.
It is not yet clear whether the European Central Bank will
be able to enforce fitness and probity rules once it takes over
supervision of the euro zone's banks.
Philippe-Emmanuel Partsch, partner at Luxembourg-based law
firm Arendt & Medernach, told Reuters the ECB would have no more
power than the EBA has.
Pierre-Henri Conac, an expert in EU banking law with
Luxembourg's university, said the ECB could go further under a
clause of the single supervisory mechanism legislation that
empowers the ECB to establish adequate corporate governance at
the banks it supervises.
"If you don't control this, you don't control anything in
the bank; it would make no sense if you could not control this,"
Conac said. "The ECB is entitled to make a new review of fitness
and probity, and I think they will do it."
The ECB declined to comment.