Weber not candidate for ECB president: Sources

Bundesbank chief Axel Weber will not be a candidate to succeed Jean-Claude Trichet as president of the European Central Bank when the Frenchman's term expires in October, European sources told Reuters on Wednesday.

Chancellor Angela Merkel is unlikely to propose another German to succeed Trichet, government sources said, adding however that no final decision had been taken.

Klaus Regling, head of the European Financial Stability Facility -- the euro zone's bailout fund -- is viewed as a second German option although he said last year he was not interested and told reporters on Wednesday he was happy in his current job.

Weber, a hardline inflation-fighter who has led Germany's central bank for nearly seven years, had been seen as the leading contender to replace Trichet, who has steered the ECB with a steady hand during the euro zone's crippling debt crisis.

But Weber's staunch public opposition last year to the Frankfurt-based central bank's decision to buy the bonds of weak euro zone members annoyed countries like France and may have doomed his chances for Europe's top monetary policy job.

A German source told Reuters that Weber had decided to rule himself out for the ECB post after he was informed two weeks ago by the German government that his candidacy did not have the necessary support elsewhere in Europe.

Several officials said Merkel, who spoke with Weber by telephone on Wednesday morning, had signalled her readiness to fight for his candidacy despite the opposition and was taken by surprise when he decided to bow out.

"This decision has to do with the personality of Axel Weber," a senior German coalition source said, referring to him as "impulsive".

The report of his withdrawal from the unofficial race surprised markets, pushing the euro down and German bond futures higher. But the moves were limited and short-lived, suggesting investors believe a monetary "hawk" is likely to replace Trichet, even if it isn't the 53-year old Weber.

The Bundesbank declined to comment on the matter and Weber did not make any public statements on Wednesday. But a source close to him suggested he could step down from the German central bank before his first term expires in April 2012.

"He sees his task as Bundesbank president as having been largely fulfilled," the source said. "His eighth and last year in office begins in April. The Bundesbank will be handed over to a successor in good shape. He is not available for a second term at the helm of the Bundesbank."

German government spokesman Steffen Seibert refused to comment on Weber's future but said Berlin wanted a "strong candidate" to replace Trichet at the ECB and that this person could be a German.

"The question of who succeeds Mr Trichet is not on the agenda now, as his term doesn't end until late autumn. Anyway this is a matter to be decided on internationally and the German government will have an opinion when it is time," said Seibert.

A senior banking source said there was no agreement for Weber to take a post at Deutsche Bank after rumours surfaced that he could move to Germany's largest commercial bank.

Grand bargain 

Leaders from the 17-nation euro zone are expected to approve a successor to Trichet by the summer and will take their lead from Merkel and French President Nicolas Sarkozy.

The bloc's leaders are currently embroiled in negotiations on a comprehensive new package of measures to address the region's sovereign debt crisis, with Berlin pushing other member states to commit to German-style fiscal discipline in exchange for agreeing to increase the bloc's bailout fund.

Berlin has repeatedly denied that the decision on the ECB presidency post would be part of a "grand bargain" that also included the policy package, which is expected to be finalised at a March 24-25 European Union summit.

But deals on top posts have often been sealed in the EU as part of broader agreements on other contentious issues.

"I am very surprised that this has come up now because one would have expected Germany to keep this card until the very end," said an economist at a European bank who requested anonymity.

Weber's opposition to the ECB's bond-buying programme reinforced the view in some European capitals that he was not the man to run monetary policy in the bloc at a time when the euro zone is struggling to emerge from the deepest crisis in its 12-year existence.

France and southern European countries may have pushed hard behind the scenes for a candidate who would be more willing to use extraordinary measures, even if they were in conflict with the strict inflation-fighting mandate the ECB received when it was created in 1998.

"He's not our favourite guy," said one French official on Wednesday, citing Weber's stance on ECB bond buying.

Other candidates 

Weber's reported withdrawal throws wide open the race to succeed Trichet.

Along with Regling, Italian central bank head Mario Draghi is seen as another top contender. As chairman of the Financial Stability Board, he has been in charge of coordinating global financial regulation since the 2008-09 crisis.

Other names that have been mentioned include Bank of Finland Governor Erkki Liikanen, a former European Commissioner and a monetary policy moderate; Ewald Nowotny, Austria's central bank chief; and Yves Mersch from Luxembourg, who is the longest serving member of the ECB's governing council.

Marco Valli, chief euro zone economist at Unicredit, said that with Weber out of the way, a candidate from a small country like Mersch or Liikanen appeared most likely.

"Draghi's main problem is his nationality," he said. "With the debt crisis still far from being solved, it's not easy to see the ECB steering so clearly towards the periphery."

A German source said Merkel's economic adviser Jens Weidmann was seen as the leading candidate to replace Weber at the Bundesbank when he leaves.