Lagarde takes ECB governors on retreat to iron out differences - sources

By Balazs Koranyi, Francesco Canepa and Frank Siebelt

FRANKFURT (Reuters) - European Central Bank President Christine Lagarde took members of the rate-setting Governing Council on a private retreat on Wednesday to discuss the inner workings of the bank's top body, the ECB said on Wednesday, confirming an earlier Reuters story.

Lagarde, who took the reins at the ECB just two weeks ago, has inherited a divided Governing Council, plagued by leaks and public opposition from some policymakers to a lavish stimulus scheme championed by former ECB boss Mario Draghi. This will likely tie Lagarde's hands for much of next year.

The turmoil, including rare public dissent by the central bank chiefs of Germany, the Netherlands and Austria, has created an impression of discord and raised doubts among some market players about the ECB's resolve to take action in the future.

Hoping to heal this rift, Lagarde invited the 19 euro zone central bank governors and the board for a private meeting outside the ECB building, offering an opportunity for candid, off-the-record discussions without staff or aides, two sources familiar with the matter said.

"Members of the Governing Council met at the invitation of President Lagarde for an off-site retreat to discuss in an open an informal setting the running of the Governing Council going forward," an ECB spokesman said.

The move is seen as an attempt to contain debates within the confines of the central bank and to prevent leaks that could damage the ECB's credibility and effectiveness.

In her first formal Governing Council meeting earlier in the day, the ECB handled routine business like an upcoming Financial Stability report and also heard a presentation from board member Benoit Coeure on payments.

Since it was a non-policy meeting, the economic outlook and monetary policy were not discussed and the meeting lasted just over an hour, the sources added.

"Lagarde was smooth, handled the meeting like she's done this a hundred times already," said one of the sources, who declined to be named.

(Editing by Gareth Jones and Bernadette Baum)