ECB to spend €300 setting up watchdog

The European Central Bank will spend 300 million euros this year and next in building an elite group to monitor top banks, with the lion’s share spent on generous pay for many of its staff.

While the new watchdog is funded by a levy on the banks rather than by taxpayers, the wage bill could reignite a debate about salaries for European Union officials after protest parties triumphed in elections to the European Parliament in France, Britain and elsewhere.

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For the hiring spree, which has prompted a flood of 8,000 applications, the ECB has a 156 million euro budget in 2015 for 1,000 staff earning low-tax salaries of up to 245,000 euros a year for the top supervisors.

The new authority in Frankfurt will lead supervision of banks throughout the 18 countries of the euro zone, overseeing a clean-up of the sector this year and ensuring that the lenders blamed for triggering the financial crisis are kept in check.

Revealing the budget for the “Single Supervisory Mechanism” (SSM), the ECB defended what it called “comparatively good conditions” as necessary to recruit qualified staff. “You need to have some good people,” said Steven Keuning, the ECB’s budget chief, told reporters on Tuesday. “This is not amounting to a very lavish bureaucracy.” A further 78 million euros or so will be spent next year on travel, consultancy and information technology, while 26 million euros is set aside for premises. The ‘gross salaries and other personnel costs’ at the agency work out at roughly 156,000 euros per person.

ECB President Mario Draghi earned 378,000 euros last year while the watchdog’s chief, Daniele Nouy, does not disclose her salary. The issue of pay for top European civil servants is contested while the economy remains sluggish and unemployment in some countries such as Spain and Greece is at a record high. “People are being alienated for several reasons,” said Costas Chrysogonos of Greece’s leftist Syriza party, who will join the growing number of critical voices in the European Parliament following the elections which ended on Sunday.

The new ECB watchdog, which will take the pulse of the euro zone’s biggest banks in health checks this year, will be tasked with restoring shattered confidence in the sector. For some bankers involved with risk management, for example, the hiring in Frankfurt offers hope in an often barren jobs market. Supervisors working for national agencies that are handing over part of their powers to the ECB are also throwing their hat in the ring. (Reuters)