EU Ombudsman says banking watchdog will avoid 'damaging' staff moves in future

LONDON (Reuters) - The European Union’s banking watchdog has implemented recommendations to avoid further “damaging revolving door” moves by its senior officials to private sector lobby groups, the EU Ombudsman said on Tuesday.

The European Banking Authority’s (EBA) then executive director Adam Farkas resigned in 2019 to head the Association for Financial Markets in Europe (AFME).

The Ombudsman said in May that Farkas’ appointment should not have been allowed, finding two instances of “maladministration” by EBA, and made three recommendations for the watchdog to implement.

The EBA coordinates stress tests on leading lenders, obtaining commercially sensitive information to see if they can withstand major shocks unaided.

The Ombudsman’s recommendations included the need to, when necessary, forbid senior staff from taking up outside positions for a certain period of time after their term of office ends.

The EBA has “worked hard” to implement the recommendations, the Ombudsman said in a statement on Tuesday.

“I am confident that the wide range of measures it has introduced will help it avoid damaging revolving door moves in the future. Other EU institutions and agencies should draw on these new EBA safeguards when revising their own rules,” it said.

“I also welcome the European Commission’s decision to put in place a two-year Commission-wide cooling off period on meetings with the CEO of AFME until 1 February 2022.”

EBA Chairman Jose Manuel Campa said EBA needs input from the banking sector to carry out its work, but there are internal procedures to ensure that its staff remain impartial and independent.

EBA recognises that it “took some time” to completely remove Farkas’ access to confidential information at the watchdog, Campa said, adding that in May it prohibited Farkas from becoming a board member of TheCityUK, a UK financial services lobby, for a period of time.

Reporting by Huw Jones, editing by Ed Osmond