ECB’s new top supervisor Buch is prepared to be tough

FRANKFURT (Reuters) – The European Central Bank’s new chief supervisor, Claudia Buch, is a German central banker and scholar whose mild manner belies a willingness to take tough decisions, former colleagues say.

Buch, 57, started her career as an academic economist in the fields of financial markets and banking in the 1990s before becoming a key advisor to the German government under chancellor Angela Merkel in 2012.

That paved the way for her appointment two years later as vice-president of the German central bank, where she was responsible for financial stability before taking over bank supervision earlier this year.

In both roles, Buch has warned about inflated property prices in Germany and excessive risk taking by banks, and against attempts by the financial lobby to water down regulation.

“No crisis has ever been created by overly strict supervision,” she said in a recent interview with German newspaper Sueddeutsche-Zeitung.

Several people who have worked with Buch during her time at the Bundesbank commend her polite and friendly demeanour – but say she did not worry about making unpopular decisions.

Perhaps courtesy of her academic background, Buch is known to keep an open mind in debates – which can be a rare commodity in polarised policy discussions, the people, who spoke on condition of anonymity, added.

At informal hearings for the ECB job at the European Parliament , Buch was perceived as less well-versed in the detail of banking supervision than rival candidate Margarita Delgado. The Spaniard has been a bank supervisor for decades compared with just months for Buch.

But Buch showed some grit as a guardian of financial stability, central bank jargon for fighting financial bubbles, batting back calls from the construction sector this year to lower some capital requirements to support lending hit by surging interest rates.

She has also opposed any suggestion that rules put in place to prevent a repeat of the late-2000s global financial crisis be rolled back.

“Right now is not the time for a big deregulation debate,” Buch told a conference earlier this year.

In a speech before her interview for the ECB role, Buch said supervisors should seek input from beyond the financial world, including “enterprises and households … non-governmental organisations, journalists and the media, academia”.

She pledged to expand the Bundesbank’s format for public dialogue, which would mark an innovation for the relatively closed world of banking supervision.

But in the same speech she also opposed easing financial rules to stimulate green investment, as suggested by some academics.

This may win her few friends among progressives in a growing debate inside and outside the ECB on how to finance the green transition.

“Potentially lowering regulatory standards in order to achieve climate policy objectives would be outside the scope of the supervisory mandate,” Buch said.

(Reporting By Francesco Canepa; editing by Catherine Evans)