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ECB offers bankers and investors leeway over conflicts of interest
November 14, 2016 / 2:00 PM / 10 months ago

ECB offers bankers and investors leeway over conflicts of interest

FRANKFURT, Nov 14 (Reuters) - Actions taken by bankers or bank shareholders to mitigate any potential conflict of interests will be taken into account by the European Central Bank when it is considering whether they are “fit and proper” to hold their positions.

New ECB guidelines published on Monday, which apply to those running banks as well as people with qualifying shareholdings, are meant to give investors and bankers insight into the ECB’s work as the euro zone’s top banking watchdog, a role it has taken up in 2014 in response to the bloc’s financial crisis.

The ECB has to approve senior managers, board members and significant shareholders at the 129 lenders it directly supervises and has the power to reject appointments or attach mandatory conditions or non-binding recommendations if it finds conflicts of interest or shortcomings in the candidates’ competence or reputation.

The draft guidelines, which are subject to a public consultation and due to come into effect in the second quarter of 2017, say that when deciding on any conflicts of interest the ECB may accept “mitigating action”.

“What we...would like to see in the conflict of interest policy is that the candidate ensures that he will always act with independence of mind and would not participate in decisions that are directly linked to the position that he has,” ECB supervisor Sofia Toscano Rico said during a conference call.

The ECB gave no specific examples of where the new guidelines would apply among European banks.

However, earlier this year the ECB opposed former Italian Prime Minister Silvio Berlusconi’s Fininvest owning a “significant stake” in asset gatherer Mediolanum after he was convicted for tax fraud.

Fininvest is challenging the decision.

The central bank said its supervisors would consider both pending and concluded legal cases in their assessment of whether an individual was fit and proper.

“While there is a presumption of innocence, the very fact that an individual is being prosecuted is relevant to propriety,” the ECB said. (Additional reporting by Andrei Khalip in Lisbon; Editing by Alexander Smith)

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