July 7, 2013 / 1:08 PM / 6 years ago

European regulator preparing database on bankers

LONDON (Reuters) - The European Union will soon begin sharing information on how bankers fare in ‘fitness and probity’ tests in member states, making it harder for errant bankers to evade regulatory scrutiny by crossing national borders.

A laser beam touches the Gherkin from the Shard during the laser and searchlight show which marks the completion of the exterior of the Shard building in central London July 5, 2012. REUTERS/Olivia Harris

The European Banking Authority’s regulation director Isabel Vaillant told Reuters that work will begin on the new fitness and probity database next year, ending the current system of ad hoc sharing between national authorities.

The database will contain details of national supervisors’ assessments of newly appointed bank directors, senior management, divisional heads and some other key functions like internal control.

In the wake of the global financial crisis, when bankers were blamed for taking their institutions and in some cases their national economies to the brink, the register is part of a wider effort by the EBA to standardize the way countries across the EU 28 decide which bankers are fit and proper for the job.

The EBA lacks the power to compel countries to set the same standards for bankers across the EU but has brought in new guidelines on how countries should evaluate bankers’ suitability and will “name and shame” countries that don’t comply, Vaillant said.

The EBA was given the power to collect the information under the latest version of new European banking regulations dubbed CRD IV.

“We will build a database here only for the purposes of this,” she said, adding that while the database could not include information obtained from the police it would include other information collected by supervisors, including whether candidates had received the regulatory nod for a role.

All the authorities will have to consult the database when they are assessing candidates who present themselves for new roles that are captured by that country’s fitness and probity regime, a group that usually includes directors, senior managers and heads of major divisions.

National authorities will have to submit information to the centralized system, but a regulator’s refusal to allow a candidate to take a position in one country will not automatically mean a rejection in another, Vaillant said.

“It (the result) has to be circumstantiated and scrutinized,” she said. “Why did you have a refusal? Was it because you were not an investment banker, but a retail banker in a small bank? Is it because you were not of good repute? This has more weight, probably, and may ban you everywhere. But you need to consider the individual case; there is no tick box approach.”


Most EU countries have signaled their intention to comply with the guidelines, and Vaillant hopes they will be implemented effectively within the next two years.

Though the guidelines are not binding, Vaillant said the ability to name and shame was a form of policing.

It is not yet clear whether the European Central Bank will be able to enforce fitness and probity rules once it takes over supervision of the euro zone’s banks.

Philippe-Emmanuel Partsch, partner at Luxembourg-based law firm Arendt & Medernach, told Reuters the ECB would have no more power than the EBA has.

Pierre-Henri Conac, an expert in EU banking law with Luxembourg’s university, said the ECB could go further under a clause of the single supervisory mechanism legislation that empowers the ECB to establish adequate corporate governance at the banks it supervises.

“If you don’t control this, you don’t control anything in the bank; it would make no sense if you could not control this,” Conac said. “The ECB is entitled to make a new review of fitness and probity, and I think they will do it.”

The ECB declined to comment.

Reporting By Laura Noonan; Editing by Will Waterman

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