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BaFin‘s Supervisory Tasks – an Overview
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Your lecturer: Dr. Johannes Engels
• 1978 – 1980 Pre-Examination at RWTH Aachen
• 1980 – 1983 Examination at Köln University
• 1983 – 1984 Lance Corporal at German Airforce Support Command
• 1985 – 1986 Doctor-Degree at Köln University
• 1986 – 1988 Trainee at Simonbank AG, Düsseldorf
• 1988 – 1991 Advisor at Deutsche Verkehrs-Kreditbank, Frankfurt/ M.
• 1991 – 2001 Policy Officer in the Federal Banking Supervisory Office, Berlin
• Since 2001 Senior Policy Officer in the Federal Financial Supervisory Authority, Ffm.
• Since 2012 Lectureship at the University for Applied Sciences, Mainz
• Since 2014 Member of the steering committee in the European Supervisory Education Initiative
Contact: [email protected]
17.11.2015
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Content
1. BaFin – a short flash
2. The German Banking Act as common supervisory basis
between Bundesbank and BaFin
3. International co-operation between Bundesbank and BaFin in
the European- and the worldwide supervisory level
Auf dem Weg zur europäischen Bankenunion?| 27.11.2012 |
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BA in Germany | 17.11.2015 | Seite 4
BaFin – subjects of integrated financial supervision
Approx. 2,500 employees
Regulation of approx.
- 1,850 credit institutions
- 680 financial service institutions
- 570 insurance undertakings
- 30 pension funds
- 80 investment companies
- 400 leasing companies
- 180 factoring institutions
Bonn
Frankfurt
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Banking Supervision Directorate
• Licensing, revocation and limitations of operations of credit and financial services institutions
• Solvency supervision of credit and financial services institutions
• Risk management
Insurance Supervision Directorate
• Licensing and revocation of insurance companies
• Solvency supervision of insurance companies
• Risk management
Market Supervision Directorate
• Market surveillance: Insider supervision, transparency
• Investor protection: Supervision of rules of conduct by investment services enterprises and investment companies
• Licensing and supervision of collective investment schemes asset management
General Administration4 Cross Sectoral
Departments
Public Relation OfficeInternal Revision,
Compliance
President & Directorate
BaFin‘s structure
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| 17.11.2015 | Seite 6
Banking Supervision
Banking supervision – the internal organization
BA 1Mayor banksand complex
groups
BA 2Savings andmortgage
banks
BA 3Private and
spezialized banks
BA 4
Co-operative banks
Section BA 11
Section BA 12
… Section BA 16
Section BA 21
Section BA 22
… Section BA 26
Section BA 31
Section BA 32
… Section BA 36
Section BA 41
Section BA 42
… Section BA 47
BA 5
General policy
Section BA 51
Section BA 52
… Section BA 58
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30.03.2007 | Page 7
German banking structure
An overview to the German banking market
Credit Institute Sum Of this: foreign banks
Major banks 4 1
Regional commercial and private banks 180 70
Branches coming outside ECR 30
Branches coming from ECR 70
Representative offices 130
Savings banks and landsbanks 430
Co-operative banks 1100
Banks with special tasks 40
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30.03.2007 | Page 8
German banking structure
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BA in Germany | 17.11.2015 | Seite 9
Banking market structure in Germany
15%
48%
37% Private Banks
Savings Banksand Landbanks(public sector)
CooperativeBanks
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Content
1. BaFin – a short flash
2. The German Banking Act as common supervisory basis
between Bundesbank and BaFin
3. International co-operation between Bundesbank and BaFin in
the European- and the worldwide supervisory level
Auf dem Weg zur europäischen Bankenunion?| 27.11.2012 |
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BA in Germany | 17.11.2015 | Seite 11
The development of the German banking supervisory system (1)
(Re-)Enacting of Banking Act, 1962
• Foundation of the FBSO as part of the Ministry of Economics
• One single banking supervision in Germany
• Additional supervision of building societies (since 1972)
• Shift to the Ministry of Finance (1973)
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The development of the German banking supervisory system (2)
Single Financial Supervision, 2002
• Single supervision entity (= Federal Financial Supervisory Authority – BaFin)
• Conversion in a public institution apart from Ministry of Finance
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The development of the German banking supervisory system (3)
Basel II – amendments from 2007 on
• Change to a more qualitative supervision
• Change to more on-site supervision (MoU with Deutsche Bundesbank)
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The development of the German banking supervisory system (3a)
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The development of the German banking supervisory system (3b)
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The development of the German banking supervisory system (3c)
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The development of the German banking supervisory system (4)
Basel III – amendments from 2014 on
• Continuing of qualitative based supervision
• More TIER I Capital including capital conservation buffer and anti-cyclical buffer; less (instable) TIER II Capital
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30.03.2007 | Page 18
Supervisory co-operation between BaFin and
Bundesbank (5)
• Only some of possible juridical persons (like share holding
company or limited company)
• No retail salesman
• Prohibition of non-banking services
• Presentation of a business plan
• Forwarded to BaFin and Bundesbank
• Additional information to Banking Union (ECB)
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Supervisory co-operation between BaFin and
Bundesbank (6)
• Minimum requirement of own capital (€ 5 Mio.)
• Minimum requirement of two managers
• Managers must be qualified and honest
• Managers can only work for the credit institution
• Check of supervisory board
• Check of ownership
• Check of holding structure
• No check of the market!
• >>>>>“Single License“<<<<<
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BA in Germany | 17.11.2015 | Seite 20
Supervisory Standards
1. Solvability
2. Liquidity
3. Large loan regulations
4. Overall banking management
5. Qualification of board of directors
and others (see: MA Risk as qualitative supervision)
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30.03.2007 | Page 21
1998-2003
Ab 1998
Bundesbank and BaFin - Early Warning System
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Bundesbank and BaFin - Early Warning System
Concrete supervision with BAKIS (1)
BAKIS working group started in 1996, the system itself began to run one year later
Aims of BAKIS economic ratios:
- Quick assessment of a bank’s general economic/ financialsituation
- Early detection of trends as an early warning system
- Detection of risk accumulations
- Observation of general developments
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Bundesbank and BaFin - Early Warning System
Concrete supervision with BAKIS (2)
BAKIS has to fulfil in general:
- A systematic analysis
- Comparisons in time
- Comparisons between groups
But: absence of a warning signal does not mean releasing from surveillance!
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BA in Germany | 17.11.2015 | Seite 24
Bundesbank and BaFin‘s sources of information
Auditors‘ Reports- Announcement of the auditors in case of
danger
Special Audits - by private auditing companies- by the Bundesbank- by BaFin itself (only in special cases)
Announcements, statistics and reports by banks
Meetings, discussions, visits
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Qualification of Board of Directors
- Personal reliability
- Professional qualification:
- theoretical knowledge- managerial experience- experience in guidance of persons
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BA in Germany | 17.11.2015 | Seite 26
Measures and Sanctions
Simple letter
Serious letter
Warning
Money penalty (up to € 5 Mio.)
Demand for dismissal
Prohibiting of loan granting of a certain amount
Add-on to liable capital
Moratorium
Revoking of license
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Content
1. BaFin – a short flash
2. The German Banking Act as common supervisory basis
between Bundesbank and BaFin
3. International co-operation between Bundesbank and
BaFin in the European- and the worldwide supervisory
level
Auf dem Weg zur europäischen Bankenunion?| 27.11.2012 |
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Banking Supervision | 17.11.2015 | Seite 28
European financial services supervision (1)
International level
European level
National legislation (D)
Decrees
Minimum requirements
Interpretation
Basel‘ recommendation BCBS
Harmonization of EC Directives
Convergence of supervisory practices
CEBS/
EBA
New:
Banking Union
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European financial services supervision (2)
European Banking Union
• European Central Bank takes
all decisions (Banking Union)
• The national banking
supervisors have to inform
and to support the Banking
Union
• This support includes as well
the preparation of decisions
Auf dem Weg zur europäischen Bankenunion?| 27.11.2012 |
ECB
National banking-superv.
All banks in Euro-zone
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Worldwide co-operation (Different co-ordination levels)
30International cooperation of central banks
National
level
European
level
International
level
Degree of formality
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| 17.11.2015 | Seite 31
Thank you very much!
Dr. Johannes Engels
- Senior Policy Officer -
Section technical co-operation
Federal Financial Supervisory Authority (BaFin)
Marie-Curie-Str. 24-28
60439 Frankfurt/ Main, Germany
Tel.: 0049-228-4108-1605
Fax: 0049-228-41086-1605
E-mail: [email protected]