ECB's Lagarde defends bank supervisor pick after pushback

European Central Bank (ECB) President Christine Lagarde holds a press conference, in Frankfurt

SANTIAGO DE COMPOSTELLA (Reuters) - European Central Bank President Christine Lagarde defended on Friday the bank's pick to head its bank supervision arm, despite the European Parliament's preference for a rival candidate to oversee a 26 trillion euro banking sector.

The ECB this week selected Bundesbank Vice President Claudia Buch to lead the Single Supervisory Mechanism from Jan 1 over Bank of Spain Deputy Governor Margarita Delgado, who has amassed three decades in supervision.

Some lawmakers expressed frustration over the pick given that the Committee on Economic and Monetary Affairs expressed a clear preference, but most appear to agree that Buch is also a qualified candidate.

"I would encourage all of us not to overdramatise," Lagarde told a news conference.

Lagarde said that the 26-member Governing Council, who selected Buch, took the committee's opinion into account but noted that the committee had no veto but merely an opportunity to formulate an opinion.

Once that opinion was received, policymakers followed the letter of the law in the selection process, Lagarde added.

The key point of contention is that Buch has relatively limited experience in bank supervision, having joined the ECB's Supervisory Board only this year, while Delgado has spent decades in the field.

Buch must now go back to the same committee for a public hearing, tentatively scheduled for 0800 GMT on Wednesday.

(Reporting by Jan Strupczewski; writing by Balazs Koranyi; Editing by Chizu Nomiyama)