Being a banking director: regulatory difficulties between sanctions and interlocking directorates

This paper analyzes the possibilities of an adverse selection perspective in the market of banking managers due to both the restatement of sanctions and the ban on interlocking directorates. The result of this research shows the risk that credit institutions will not find managers because them will not accept the increasing risk in exchange of the current payments. The analysis of the regulatory framework – and in particular of Directive no. 2013/36/EU and Regulation EU no. 575/2013 – will focus on the purpose of sanctions in the banking business, having regards both to the European regulation and to certain examples of national implementations. This is why we focus on the relevance of professional duties and the current ways of enforcement. The paper concludes that the supervising authorities shall verify if the externalities of the ban on interlocking directorates will affect the banking industry, which is already under pressure because of its market condition, and then suggest specific action in order to improve the convenience of being a banking director.