April 21, 2015 / 10:34 AM / 4 years ago

BNP executive tipped as front-runner to head Bank of France

PARIS (Reuters) - Top BNP Paribas (BNPP.PA) banker Francois Villeroy de Galhau emerged as a possible candidate to replace the retiring governor of the Bank of France on Tuesday as he was named to lead a new state-sponsored investment drive.

BNP Paribas Chief Operating Officer Francois Villeroy de Galhau speaks during a news conference to present the bank's 2014 annual results in Paris, February 5, 2015. REUTERS/Gonzalo Fuentes

The naming of Villeroy de Galhau to a French public service role could help allay any domestic political objections further down the line to the Socialist government picking a commercial banker to replace Christian Noyer when he retires this year.

Yet daily Les Echos reported ECB President Mario Draghi had been surprised to learn in recent days that a BNP banker could get the job as he expected ECB Executive Board member Benoit Coeure, a French national, to get it.

Villeroy de Galhau will step down as one of the two chief operating officers at France’s biggest bank to lead the newly-created investment mission, the government said in a statement.

It said the job would entail seeking to ensure that French and European companies, particularly smaller ones, derive full benefit from the low-interest-rate environment.

France has for months called for euro zone monetary policy to do all it can to support a tentative recovery and has loudly applauded the gradually weakening of the euro and the low cost of borrowing.

As a close lieutenant of Draghi, Coeure has played a vital role drafting the ECB’s quantitative easing program and has been a forceful advocate of easier monetary policy.

Asked to comment on the implications of Villeroy de Galhau’s appointment, an official in President Francois Hollande’s office said only: “Nothing more to add from us”.

A former chief of staff for ex-finance minister Dominique Strauss-Kahn in the late 1990s, Villeroy de Galhau had been mooted as a possible replacement for Noyer and has also been mentioned as a contender to head of the French Treasury.

Naming a top private sector banker to head the Bank of France, which oversees the industry, risks creating awkward questions for Hollande, who during his election campaign declared the world of finance an “enemy”.

Like many of France’s senior company executives, the 56 year-old Villeroy de Galhau spent his early career in government and various senior roles in the Treasury and Finance Ministry.

He also served as European adviser under Socialist Prime Minister Pierre Beregovoy between 1990 and 1993, as well as roles at the Finance Ministry over the subsequent decade. In between, he was a financial adviser in Brussels, where he worked on the introduction of the euro currency.

Reporting by Michel Rose, Matthieu Protard and Elizabeth Pineau; writing by Leigh Thomas; editing by Mark John

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