The European Parliament's Committee on Economic and Monetary Affairs has rejected the Central Bank's Gerry Cross for the second most senior post in Europe's banking authority.

The members of ECON rejected Gerry Cross's nomination as executive director of the European Banking Authority by 27 votes to 24.

Mr Cross - director of financial regulation, policy and risk at the Central Bank - was nominated last week by the board of supervisors at the EBA to take up the director post.

The position was vacated after outgoing director, Adam Farkas, resigned to head up the lobby group, the Association for Financial Markets in Europe (AFME).

Mr Cross had worked for that body previously.

The EU ombudsman, Emily O'Reilly, has opened an investigation into the conditions the EBA imposed on Mr Farkas' departure to AFME.

Mr Farkas agreed to an 18-month ban on advising AFME and its members on topics directly linked to his work during his three years at the EBA. 

Under questioning from MEPs, Mr Cross conceded that policing the conditions would be a challenge.

He said he had asked for more stringent conditions on the terms of Mr Farkas' departure.

He also said the EU must resist lobbying pressure from banks to water down new capital rules.

The European Banking Authority was established in 2011 with the aim of maintaining financial stability in the EU.

Among other things, it conducts stress tests on European banks.