EC’s Barroso to propose McCreevy successor next week

European Commission (EC) president José Manuel Barroso will next week name his preferred choice to succeed Charlie McCreevy as European commissioner for internal market and services as part of the wider commission changeover, according to an EC official.

Following the naming of a president of the European Council and EU foreign affairs chief last week, member states submitted their nominations for the 25 remaining commission posts to Barroso, who will allocate provisional portfolios to each national candidate, pending approval by the European parliament in early January.

The list of commissioners-designate includes former French foreign minister Michel Barnier, who is widely expected to take on the internal market role. Commission observers believe the UK agreed to support Barnier in exchange for France backing UK politician Catherine Ashton for the foreign policy role.

While the EC insists nothing will pre-empt Barroso's decision, the possibility of a French deal has caused some alarm as the next internal market commissioner would probably be responsible for pushing through a series of financial services regulations in Europe, including over-the-counter derivatives reform, changes to the capital requirements directive and hedge funds regulation.

"The character of the new commissioner will certainly play a significant role, depending on political and national origins. It's clear that some EU member states have a much more reactionary approach to regulation of derivatives than others; the French and Italians are very staunchly in favour of as much transparency and exchange trading as possible, while the British, Germans and Nordics are more balanced," one industry association official told Risk.

But it will be up to Barroso to decide whether Barnier, who served as European commissioner for regional policy between 1999 and 2004, is the right man for the internal market job. Any of the 24 other commissioners-designate could take on the role, including current competition commissioner Neelie Kroes and current economic and monetary affairs commissioner Joaquín Almunia.

There have also been suggestions that given the size and importance of financial services oversight, it could be taken out of the internal market portfolio altogether and given its own department - something that would be welcomed by some market participants.

"Separating off financial services would be a very good idea because then there would be a commissioner and a whole department that would focus on that alone, and as a single point of contact could engage very directly with the authorities and institutions that would be affected by any new rules," says a senior economist at the European subsidiary of an Asian bank.

The EC official declined to comment on the possibility of creating a dedicated commission department for financial services, but agreed that the allocation of roles for the new commission could include a reorganisation of portfolios.

Once Barroso's recommendations are made public next week, they are expected to be put before the European parliament on January 11, with the aim of finalising the positions by January 27. The new commissioners would then take office immediately.