Germany, France back SNB chief to lead FSB: report

Sun Oct 30, 2011 2:27pm EDT
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ZURICH (Reuters) - German Chancellor Angela Merkel and French President Nicolas Sarkozy are backing the candidacy of the head of Switzerland's central bank to lead the Financial Stability Board, a newspaper reported on Sunday.

The FSB, the G20's regulatory task force, is charged with making sure bank regulations are strong enough to prevent another financial crisis.

It has been headed by Mario Draghi, who will take over as European Central Bank president on November 1. Swiss National Bank Chairman Philipp Hildebrand and Bank of Canada Governor Mark Carney are vying for the job.

Heading the FSB would not require the incumbent to give up his central bank governorship. An announcement is expected at the November 3-4 G20 summit.

Citing a source familiar with the election process, the Swiss paper SonntagsZeitung said Merkel favored Hildebrand and also convinced Sarkozy to back him. In exchange, Switzerland had to support Christine Lagarde to head the International Monetary Fund, the paper said.

President Nicolas Sarkozy's office would not confirm the report.

Hildebrand has been a vocal proponent of tougher bank regulation after the Swiss government had to bail out flagship bank UBS UBSN.VX during the financial crisis. His credentials to chair the FSB have been boosted by Switzerland's enacting of bank regulation stiffer than the new Basel III global rules.

Hildebrand and Carney are good friends and studied together at Oxford.

The SonntagsZeitung also reported that at a recent FSB meeting in Zurich, the idea of naming one of the two to head the FSB and the other to become his deputy came up.   Continued...

<p>Swiss National Bank (SNB) Chairman Philipp Hildebrand smiles during the recording of a statement for the Swiss National TV in the SNB building in Bern September 6, 2011. REUTERS/Peter Schneider/Pool</p>