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European banking lobby faces backlash over hiring regulator as CEO
[LONDON] The move by a European banking lobby to appoint one of the sector's regulators as its new boss faced criticism on Tuesday, with calls for tougher conditions on "revolving door" hires.
The Association for Financial Markets in Europe (AFME) said it has appointed Adam Farkas as chief executive, to succeed Simon Lewis.
Mr Farkas, 51, is currently executive director of the European Banking Authority (EBA), and will take up his new role at the trade body for banks in February 2020, bringing intimate knowledge of regulatory thinking.
Switching between private firms and public authorities is common in financial services, and is often referred to as a revolving door.
Paris-based EBA writes rules that flesh out European Union banking laws, and coordinates regular "stress tests" of the bloc's major lenders to see if they should hold more capital to withstand market shocks.
Given the sensitive information on banks that Mr Farkas has had access to, EBA said on Tuesday that he will immediately cease to participate in the agency's policy and supervisory work, and would only deal in operational matters until the end of October.
He will then be reallocated other duties for the remainder of his notice period, which ends on January 31. Mr Farkas cannot lobby the watchdog or have professional contacts with its staff for two years after leaving.
"Mr Farkas cannot advise his new organisation's members or otherwise contribute to the activities of his new organisation on topics directly linked to the work he carried out during his last three years of service for 18 months after leaving the EBA," the watchdog said.
But Sven Giegold, a German Green party member of the European Parliament's economic affairs committee which scrutinises the work of EBA, said conditions imposed on Mr Farkas' departure were weak.
"The crucial point is not whether Farkas lobbies the banking supervisor, but whether his insider knowledge goes directly to the banking lobby," Mr Giegold said in a statement.
"A cool-off period of 24 months would make sense."
Finance Watch, a Brussels-based body that campaigns for well-regulated and safer financial services for consumers, said the EBA has allowed Farkas to go through the revolving door with conditions that do not meet appropriate standards.
EBA should either stop Mr Farkas taking up his new job or impose a two- to five-year cooling-off period, Finance Watch said.
EBA chair Jose Manual Campa said Farkas has helped to build up the agency into a sound operation since its creation in 2011. He said the search for his replacement will start soon.