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ECB plans more intrusive checks on bank directors

FILE PHOTO: The headquarter of the European Central Bank (ECB) is photographed during sunset, as the spread of the coronavirus disease (COVID-19) continues in Frankfurt, Germany, April 28, 2020. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) - The European Central Bank plans stricter and more intrusive checks on the suitability of bank directors, hoping to close national loopholes, ECB board member Yves Mersch said in an editorial on Thursday.

The European Union has already tried to tighten control after the financial crisis, but member states have been slow to adopt new rules, resulting in a regulatory hodgepodge that’s made it hard for the ECB, the euro zone’s bank supervisor, to vet candidates.

“The ECB will close existing gaps by implementing stricter and more intrusive fit and proper assessments,” Mersch, the deputy head of the ECB’s supervision arm, said in an opinion piece published in several newspapers.

He said the ECB will not only check qualifications but will also scrutinize information that could damage the reputation of board candidates, including past criminal convictions or ongoing judicial or administrative proceedings.

The ECB will now ask banks to seek its approval even before appointing board members and will create a new team dedicated to scrutinizing board members and sanctioning banks.

Mersch added that the ECB will also issue new rules on how it plans to check existing board members when new information is revealed.

Reporting by Balazs Koranyi, editing by Larry King

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