Andrea Enria is still struggling to get used to one thing: raising his hand at the right moment. Since taking on the role of Chair of the Supervisory Board of the European Central Bank, he once again has a vote. In his previous role as Chairperson at the European Banking Authority (EBA), he had to refrain from voting. During a visit to Bonn at the end of August, the ECB’s new Chair of the Supervisory Board talked about this adjustment phase.

Andrea Enria, economist, late fifties, slim-build, narrow glasses, is no stranger on the European supervisory scene. Since the beginning of the year, the Italian national has been the head of banking supervision at the ECB. Prior to this, he was Chairperson at the EBA, led the banking supervision department at the Banca d'Italia, and occupied various roles within the ECB. Now Enria presides over the powerful Supervisory Board, which decides the fate of banks in the eurozone.

Since the end of 2014, large banks in the eurozone (significant institutions: SIs) have been subject to direct supervision by the ECB. Currently, the ECB is monitoring over 114 institutions, including Deutsche Bank and Commerzbank. Alongside the ECB, the Board includes representatives of the national supervisory authorities of the euro area countries. Germany is represented by BaFin President Felix Hufeld and by Joachim Wuermeling, Member of the Executive Board of Deutsche Bundesbank. The Supervisory Board meets on average every three weeks in the Eurotower in Frankfurt am Main.

Visit to BaFin in Bonn

During his inaugural visit to BaFin in Bonn, the ECB’s Chair of the Supervisory Board, Andrea Enria, spoke to BaFin President Felix Hufeld and Chief Executive Director of Banking Supervision Raimund Röseler. Following this meeting, he participated in an expert discussion with more than 100 of BaFin’s supervisors.

With his diplomatic approach and soft-spoken manner, Enria embodies the culture of the ECB. Nonetheless, he is well-acquainted with the perspective of a national supervisor thanks to his time at the Banca d’Italia. Enria’s modest demeanour is befitting of the substantial task facing him: to serve as intermediary between Europe’s central bank and the national supervisory authorities – and establish a common understanding between these bodies. “We all come to the ECB with different supervisory backgrounds from our diverse home countries,” said Enria. “We therefore need to develop a shared culture.”

Europeanisation of financial supervision five years ago

BaFin President Felix Hufeld recalled that the “Europeanisation” of financial supervision was started only five years ago with the establishment of the SSM, and that its success was considerable. “BaFin’s German background contributes to European supervision with considerable specialist knowledge and expertise,” said Hufeld.

In his new job as Chair of the Supervisory Board, Enria is setting the direction: “transparency, practicability and prioritisation” are the guiding principles on which Enria intends to place even greater focus in supervisory practice at the European level in future. In order to achieve this aim, Enria is planning to review the relevant tasks and processes. Staff of BaFin and the Bundesbank also work together with the ECB teams as part of the ongoing supervision of significant institutions.

Enria also explained the importance of “openness and transparency” as regards decisions and their underlying criteria so as to ensure that the ECB’s banking supervision is predictable for the banking sector as a whole. But even with such a rules-based approach, the specific circumstances of individual cases must be taken into account.

The outcome of Brexit, in contrast, is not predictable. The ECB's Chair of the Supervisory Board expects that two dozen institutions will relocate significant business segments from London to the continent following the UK’s forthcoming withdrawal from the European Union. It is estimated that assets amounting to around 1.3 trillion euros would move from the UK’s capital to the euro area in such a scenario. In Enria’s view, institutions are prepared for Brexit and have met the supervisory requirements. “However, the banks must not slacken in their efforts now,” Enria warned.

Enria signals greater proportionality

Enria displayed a willingness to discuss the matter of proportionality in the ongoing supervision of significant institutions as compared with small and medium-sized institutions. In his opinion, the requirements imposed on the respective institutions by supervisors and regulators should be oriented towards their respective risk profile. He did not specify whether there would be any concrete simplifications for small and medium-sized banks. BaFin President Felix Hufeld and Chief Executive Director Raimund Röseler welcomed the suggested increase in proportionality in supervisory practice. Both Hufeld and Röseler have frequently argued the case for greater proportionality in various European and international bodies.