European banks are beginning to view the ECB’s supervisory body as an intruder that imposes its presence on its boards of directors, is too intrusive and expresses its displeasure. Their leaders are elevating their status and challenging both the ECB’s watchdog practice and its stern warnings by imposing stricter capital requirements and banning dividends to its shareholders.

Lorenzo Bini Smaghi, a former board member, made a decisive start last month, according to a related Financial Times report. The ECB and the current chairman of the giant Societe Generale, but at the same time represents many of his colleagues. In his letter to the ECB supervisory authority, and in particular to Ramón Quintana, who supervises large international banks, Mr. Smagi asks to know what purpose and what need the presence of representatives of the ECB supervisory authority at Council meetings serves. directors. banks. He is also seeking a meeting with Andreas Enria, head of the ECB’s supervisory body, and the heads of Europe’s largest banks. The British newspaper cites sources within the ECB itself as saying that Mr Smagi is also speaking on behalf of other banks, which “have begun to voice objections and criticisms of the bank’s practices.” In his related letter, Mr. Smagi indicates that, to the best of his knowledge, “no other authority in large and developed countries is present at meetings of boards of directors and various committees for oversight”. He even adds that oversight bodies have taken such measures in the past, “which obviously did not help anything and did not express serious concern.”

“But what do they have to hide?” asked one of the leaders of the ECB supervisory body.

FT sources also say some ECB officials were surprised by Mr. Bini Smaga’s initiative and indicated that supervisors attend board meetings. some banks for many years. They also claimed that this practice allowed them to control the level and quality of the bank’s management and denied that they were trying to influence the bank’s decisions. However, the tone for the potential conflict seems to have been set by a top supervisor who, according to the FT, commented on the banks’ attitudes by asking, “What are they hiding? As noted in a related FT article, the reaction of European banks betrays their growing dislike of its methods and its over-intervention, with some of them being especially worried by the fact that in 2020 during the pandemic they banned them from paying dividends, citing risk weakened crisis.

This category includes, in particular, the confrontation between the ECB and UniCredit over the decision of the managing director Andrea Orsell to pay dividends to its shareholders totaling 16 billion euros until 2024, as well as the fact that the Italian multinational bank has not left Russia. in which he has 2.4 billion euros of blocked funds.

Something similar is happening with the Austrian bank Raiffesen. But friction between the ECB and UniCredit began when Orsel took over as CEO in April 2021 and implemented an aggressive strategy to restructure the bank’s business and return to paying dividends to shareholders. The parties exchanged views in a series of letters, which, according to FT sources, indicated “more than a strained relationship.” The British newspaper eventually notes that the stern tone of the ECB supervisor reflects growing concern about the impending crisis. In particular, it is true for UniCredit that its two largest markets, Italy and Germany, are heading into recession at full speed.