September 8, 2015 / 1:53 PM / 3 years ago

UPDATE 2-Hollande picks ex-BNP banker to head French central bank

* Current governor Noyer retires end-October

* Villeroy de Galhau beat out ECB’s Coeure (Adds details)

By Leigh Thomas

PARIS, Sept 8 (Reuters) - French President Francois Hollande named a former BNP Paribas banker on Tuesday to head the French central bank when its governor retires next month, brushing aside concerns about conflict of interest.

Francois Villeroy de Galhau, 56, was one of two chief operating officers at France’s largest commercial bank until April, when he stood down to write a government report on financing corporate investment.

Well respected by former colleagues and competitors, Villeroy de Galhau will replace Christian Noyer when he retires at the end of October, Hollande’s office said in a statement.

His nomination is subject to a green light from the finance commissions of both houses of parliament.

A staunch defender of Europe’s social model, Villeroy de Galhau stands well to the left of Noyer, and being a German speaker from Strasbourg may help him manage divergences of opinion on monetary policy with the Bundesbank.

Villeroy de Galhau is the latest former banker to whom Hollande has handed a top post even though the Socialist leader vilified the financial sector during his 2012 election campaign as his biggest enemy.

“Without questioning Villeroy de Galhau’s many qualities, this seems to be a very bad signal to me - it’s going to add to the image of banks dominating everything,” said banking sector union official Regis Dos Santos.

While the prospect of a former banker heading the central bank has raised questions of conflict of interest, many senior French financial sector officials downplay that risk.

“Though there might be some not-so-pleasant comments, at the end of the day I don’t think there will be a conflict of interest,” said one senior executive at a BNP Paribas competitor.

The risk is reduced by the fact that the French central bank is no longer the sole supervisor of the banking sector since the European Central Bank took on that responsibility last year.

Villeroy de Galhau had been in the running for the post along with ECB Executive Board member Benoit Coeure, the right-hand man of the central bank’s chief, Mario Draghi.

Villeroy de Galhau has yet to publicly develop his views on monetary policy, but is likely to be quizzed in confirmation hearings at parliament.

In a first version of his report on investment published in late August, he said EU plans to make it easier for companies to raise capital market funding should be brought forward and European insurance rules needed urgent revision to boost investment.

A graduate of France’s ENA elite academy for senior civil servants, Villeroy de Galhau spent the first 20 years of his career in the public sector, including holding a number of top posts in the Finance Ministry.

He notably helped former finance minister Dominique Strauss-Kahn to steer a wave of privatisations in the late 1990s and work out the financing for France’s 35-hour work week.

Villeroy de Galhau joined BNP Paribas in 2003 and held senior roles in consumer finance and retail banking, rising to the role of chief operating officer. (Additional reporting by Julien Ponthus, Yann Le Guernigou, Jean-Baptiste Vey and Francesco Canepa in Frankfurt; Editing by James Regan and Dominic Evans)

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