Progress in negotiations between the Government and the PP to appoint the individuals who will hold the roles of governor and deputy governor of the Bank of Spain has moved to the forefront. The recent agreement to renew the General Council of the Judiciary after more than five years of stalemate has, as expected, become the essential keystone allowing discussions about the banking supervisor to gain momentum. As this newspaper reported, the government’s objective remains to name the new governor so that person can attend the Eurogroup planning for the European Central Bank meeting on Thursday, July 18. Officials, however, emphasize that this is not a hard deadline and that the timetable could slip if negotiations with the PP require more time.
To reach this goal, the government would need to appoint the governor no later than July 16, since the ECB Governing Council begins its session on July 17 in Frankfurt, Germany, with interest rate decisions expected the following day. In addition, the Bank of Spain autonomy law requires the economy minister to appear before the Congress economy committee ahead of the appointment to inform on the matter. That adds another day to the window before the ECB meeting for the appointment to be published in the Official State Gazette to be effective.
All of this seems to raise the odds that the announcement will come next week if negotiations proceed smoothly, though the government has left open the possibility of extending beyond July 18 if necessary. Sources say discussions have not yet focused on specific names and are limited to renewing the bank’s leadership (not the CNMV, CNMC, or RTVE). They also note that even if an agreement is reached for the two top roles at the supervisor, only the governor would take effect immediately, while the deputy governor’s term would not be valid until September 11, when Margarita Delgado’s current term as deputy ends.
Confidence in the agreement
The economy minister expressed confidence on Thursday about an upcoming pact. “I hope we can reach it soon. We have taken an important initial step, which is the agreement within the CGPJ, and this opens the door to a collaborative environment for renewing the economic bodies as well. We have consistently kept the door open to an agreement for renewing the governor-deputy governor duo, and that is what we are working toward,” Cuerpo stated in an interview on a radio program.
The PP secretary-general, Cuca Gamarra, also voiced expectation of a pact, though she avoided weighing in on whether Paula Conthe, the current secretary-general of the Treasury, could become the new governor, as has been rumored in recent days. “When talks are open, there is information when conclusions are reached, and thus there is no evaluation of any individual while there are no concrete agreements. In these discussions, we will advance what we must. And when an agreement exists, that will be communicated,” she said.
Tradition of consensus
The governor of the Bank of Spain is legally chosen by the prime minister, while the deputy governor is named by the government on the governor’s proposal. Yet there is an unwritten tradition, observed with rare exceptions, that the government appoints a governor acceptable to the main opposition party, and in return the opposition helps with the deputy governor post. If understanding breaks down, the government can appoint both top directors of the supervisor, as happened in 2006 during José Luis Rodríguez Zapatero’s administration.
As always when the leadership of the supervisor is renewed, names have been circulating for months. The government has made clear that at least one of the two seats should be filled by a woman, and some sources say its aim is to appoint the first female governor in the history of the Bank of Spain. Aside from Conthe, Montserrat Martínez Parera, vice president of the CNMV, has been mentioned. The current deputy governor, Margarita Delgado, has also appeared in various lists. Among men, names such as José Manuel Campa, president of the European Banking Authority, and Fernando Restoy, head of the Financial Stability Institute at the Bank for International Settlements in Basel, have been floated. For deputy governor, Ramón Quintana, one of the BCE’s bank supervision general directors, has recently been discussed.