Interview with La Cuatro

Interview with Danièle Nouy, Chair of the Supervisory Board of the ECB, conducted by Rebeca Gimeno and broadcast in Noticias Cuatro on 10 June 2018

You are the supervisor of more than one hundred banks in Europe. Do you feel you are a very powerful woman in a world run by men?

I feel we are all very busy; there is a lot of work to do after a crisis. And it is not totally a world of men: quite a number of good supervisors are women. The Vice-Chair of the Supervisory Board of the ECB is my German colleague, Sabine Lautenschläger, and the Chair of Single Resolution Board is Elke König.

So we could say the rescue team is run by women

Supervision is not about rescuing banks, it is about making banks safer and sounder. So let’s say control of banks is also a job for women, and, in my view, women are doing reasonably well in this world.

Do you need to be very serious to be a good supervisor?

I am not quite sure I know what is meant by serious. I think we have to be very curious. We need to really understand in-depth what the banks are doing and not accept superficial responses, or responses that sound so technical that you are not sure you understand them.

You supervised Banco Popular for almost three years, didn’t you see what happened coming?

Of course we saw what happened coming, because this bank had problems with a very high percentage of non-performing exposures. In fact, it is not the only bank in this situation. But this was a burden for the bank’s profitability and solvency because the bank had to make high provisions. We had seen the statutory auditors of the bank reacting on the balance sheet, the bank also increased capital several times during the SSM period of time, but broadly speaking it was too little too late has been done.

Let’s say you are a kind of a doctor to the banks. Banco Popular could be the patient, a sick patient that you could not help?

That is not a bad comparison at all. But sometimes doctors arrive too late or sometimes the patient is too sick to be saved. There are situations like that. If bankers take bad decisions, they will suffer the consequences of those decisions.

So, supervision can do whatever it takes, but if the bankers take the wrong decisions there is not much room for supervision to work?

There are limits to what we can do. The powers of supervision before the crisis, the capacity of supervisors to stop a bank from doing stupid things, were not that strong, not strong enough. We benefit now from stronger regulation, and we have more powers and stronger supervisors. We are much better equipped to prevent a crisis but if a bank resists all of the supervisors’ efforts to improve its situation, the bank may fail.

Did you have to convince Banco Santander to buy Banco Popular?

No, that is not something that we would do. We do not manage banks or decide about what banks should buy. If two banks are willing to merge, our role is to give the final authorisation. We usually grant authorisation subject to a number of conditions. This case was a little bit special because the primary authorisation was given by the Single Resolution Mechanism rather than by us, but we were consulted by them because we have the same interest. We all want a sustainable solution.

You say banks are now in better shape

Banks on average are in much better shape. Common Equity Tier 1 capital moved from 11.3% at the end of 2014 to 14.2% by the end of 2017. So there is a lot more of the best quality capital. But this is an average. We have all kinds of situations.

How are Spanish banks doing?

Spain has undergone a complete in-depth restructuring. I think a lot has been done. We are broadly safe. The situation has been taken care of.

If you walk into a room with all the Spanish bankers, would you walk in with a smile or a serious face?

I always walk in with a smile, even when I am asking terrible things and there are very tough things to be done.

You don’t talk much about bad practices in your latest annual report. Are they not an issue anymore?

National authorities are in charge of consumer protection not us. However, we are concerned about conduct risk because banks can be fined for bad conduct risk. It demonstrates poor governance, a poor risk culture and a lack of ethics, which is not good in banks. This is largely what was responsible for the previous crisis. We consider banks with such a risk to be more risky than others so we will be tougher on the supervision of those banks.

If someone told you that you have one of the most boring jobs in the world, how would you defend yourself?

I would not accept a boring job. I am very impatient. The world is changing all the time. I am 68 and I am learning new things every day after decades in banking supervision. It is not boring at all. It could be even a bit more boring, that would be ok to get some rest from time to time.

Are you a feminist?

Yes, I am a feminist for sure. How could I not be a feminist?

Would you like to see more women running banks?

I think diversity is a big asset, and gender diversity is one aspect of that, but not the only one. We also try to have geographical diversity at the ECB. Women are doing well in supervision, women can certainly run banks. I don’t see why they would not.

But is it harder for a woman to make it to the top in the financial sector?

Maybe, but I am not so sure. I think there are a lot of opportunities and that we will see many more women leading banks. With Santander you have a very good example.

Ana Botín is the only one…

Well, it’s a start.