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Thursday, November 14, 2019

Christine Lagarde Musters ECB Team for Huddle at Castle Fit for an Empress

© Reuters.  Christine Lagarde Musters ECB Team for Huddle at Castle Fit for an Empress© Reuters. Christine Lagarde Musters ECB Team for Huddle at Castle Fit for an Empress

(Bloomberg) -- Christine Lagarde sought to reset relations between colleagues at her first meeting as European Central Bank president -- by ensconcing them in a castle fit for an empress.

The 25-member Governing Council, scarred by policy disputes under her predecessor Mario Draghi, was convened for a team-building session on Wednesday at the Schlosshotel Kronberg, a five-star luxury resort north of Frankfurt.

Participants at the Wednesday gathering -- who spoke for this story on condition of anonymity because of the private nature of ECB meetings -- described the discussions as open, friendly and constructive. They said it brought a fresh start to the group after the unprecedented rift that had raised questions over the institution’s future capacity to act.

Lagarde tweeted a photo of the event on Thursday that shows council members in the Green Salon, the biggest in the castle, which was previously the imperial music room. An ECB spokesman declined to comment on the nature of the gathering.

Lagarde had already sought to build bridges with colleagues during a series of one-on-one meetings to prepare the ground for the Wednesday gathering. The initial part of her first official meeting of the 25-member Governing Council meeting then took place at the ECB’s headquarters, at which top-level managers from euro-area companies shared their assessment of the economy, guided by detailed questions from the president.

Black Minibuses

Downstairs, black minibuses were waiting to whisk the policy makers away for a less conventional second round of meetings that had been kept off the official agenda. The destination was a spa hotel nestled in the Taunus mountain range some 30 kilometers (19 miles) away, near a fort that once guarded the frontier of the Roman empire from the local Germanic tribes.

Built in the late 19th century as a home for the dowager German Empress Victoria, the Schlosshotel Kronberg is located in a 58 hectare (143 acre) park, with an 18-hole golf course. Rooms boast antiques from the German imperial period. The Royal Suite -- at a price listed at 2,190 euros ($2,400) a night -- features the heritage-protected furniture of Wilhelm II.

In those plush hotel surroundings once frequented by Russian Tsar Nicholas II, Lagarde and her all-male colleagues on the Governing Council debated working methods, as well as their decision-making processes and communication policies, attempting to put behind them the differences that had become a schism under her predecessor. They also resolved to institute a long-touted review of their monetary policy strategy.

180 Degrees

Aside from the unusual venue, Lagarde’s methods of chairing the meeting were markedly different from those of her predecessor. Her style was 180 degrees away from that of Draghi, according to one participant.

Talks continued over dinner, featuring avocado salad and salmon. Then governors and Executive Board members including Lagarde retreated to their rooms, though a contingent stayed on at the bar for more bonding, according to one witness. The hotel’s renowned cocktail lounge offers more than 50 different whiskies, as well as selected cigars.

Such outings may seem novel for the ECB, but they are a tried-and-tested method for Lagarde, who is no stranger to taking charge of institutions in tumult. When she joined the International Monetary Fund in 2011, the global lender was reeling from a sex scandal involving its former boss Dominique Strauss-Kahn and facing pressure for greater say from developing nations.

During her time there, she would take the board and its top management on a trip outside Washington each year. Those events would typically include cultural elements and presentations by guests as well as internal discussions on strategy.

Fiery Past

Lagarde has said she wants to institute a sense of the Governing Council acting more as a team after its recent breakdown in relations, telling Bloomberg Television in September that “you’re only strong and convincing if you’re strong at home.” She also told a German magazine that policy makers should concentrate on finding common ground.

That theme of teamwork has particular poignancy at the Schlosshotel Kronberg, which once suffered badly from a breakdown of relations between colleagues. It endured major fire damage in 1967, in a case of arson by a kitchen apprentice disgruntled with the hotel chef.

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