The draft emergency ordinance whereby the Romanian government wants to radically change the supervision of financial markets by setting up one single authority out of the current three by March 15, 2013, has generated extensive disputes.
As this supervision, which targets markets worth over EUR20 billion, could be put in the hands of one single person, this has generated discontent even among the ranks of the ruling coalition, the Social-Liberal Union, or USL.
On Monday, the heads and employees of the National Securities Commission (CNVM), of the Insurance Supervisory Commission (CSA) and of the Private Pensions Supervisory Commission (CSSPP) were “thunderstruck” when they saw the draft law whereby the government planned to dissolve the three institutions and set up one single financial supervisory authority that would replace them in no more than three months’ time. The three commissions employ 450 people.
Initiated by the Finance Ministry, the draft law was sent to the three regulators who have only two days at their disposal (Tuesday or Wednesday at the latest) to say if they have any amendments. The government explains this urgency through the irregularities it found in the activity of CNVM and of CSA. The managers of these institutions have just been appointed by Parliament. They were proposed by political parties, not always recommended by their professional expertise, but supported by political forces.
Ziarul Financiar has written on several occasions about the danger of appointing supervisors with no experience, and has harshly criticized political appointments. It has supported the appointment of professionals and the model of a single supervisory institution, which works well in Austria, Poland, the Czech Republic and Bulgaria.
The draft law has generated uproar not only among the employees of the three institutions, but also among the ranks of USL, which will hold absolute majority in Parliament, after Sunday’s elections. The reason for the uproar is easy to understand because few want to put the supervision of financial markets worth EUR20 billion into the hands of one single person.
“I don’t think a law of this kind should be adopted in such a hurry, I think we should treat this ‘merger’ with a lot of precaution. I don’t see Florin Georgescu running the single supervisory authority,” said Eugen Nicolaescu, a member of PNL (National Liberal Party) and the current president of the budget-finance committee of the Chamber of Deputies.
Outgoing finance minister Florin Georgescu is among the favorites for running the Financial Supervisory Authority, or ASF. He is known as an authoritative figure, a good professional, who started from financial control and went on to handle banking supervision. However, even Prime Minister Victor Ponta said Monday that Georgescu wanted to return to its position of first deputy governor of the central bank.
Three vice-presidents are set to also be appointed as part of the management of the new authority ASF. However, the method of appointing the ASF managers does not differ from the way the commissioners of CNVM, CSA and CSSPP are currently appointed, which raises question marks over whether professional criteria are met.
The members of the ASF board are appointed by Parliament, in a joint session of the two Chambers, at the joint proposal of the four specialized committees in the Senate and the Chamber of Deputies. The distribution of management positions will be done based on the principle that the party holding majority in Parliament – USL – will be able to make the most nominations.
“It is not at all complicated how the future structure will work. The future managers will be chosen just as before. This is not candidature-based, but based on party appointments,” said Ion Giurescu, vice-president of CSSPP.
One of the hidden stakes of this draft law could be changing the CNVM management together with head Carmen Negoita, endorsed by former ruling party PDL. Sources from the capital market say CNVM is not very happy about this draft law and could give a negative opinion. On the other hand, CSSPP, headed by Marian Sirbu, who is endorsed by UNPR (part of the USL alliance) announced it would give a favorable opinion to the draft. Some of the current CSSPP heads could also be found in the future merged structure.
All in all, the capital market faces one of the biggest reforms since its establishment.
(English version by Daniela Stoican)