BaFin‘s Supervisory Tasks an Overviewgogov.org.ua/wp-content/uploads/2016/05/BaFin-s... · 2016. 5. 30. · Banking Supervision Directorate •Licensing, revocation and limitations

BaFin‘s Supervisory Tasks – an Overview

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

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 |

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

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

| 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

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

30.03.2007 | Page 8

German banking structure


Banking market structure in Germany

15%

48%

37% Private Banks

Savings Banksand Landbanks(public sector)

CooperativeBanks

Content




3. International co-operation between Bundesbank and BaFin in

the European- and the worldwide supervisory level



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)



Single Financial Supervision, 2002

• Single supervision entity (= Federal Financial Supervisory Authority – BaFin)

• Conversion in a public institution apart from Ministry of Finance



Basel II – amendments from 2007 on

• Change to a more qualitative supervision

• Change to more on-site supervision (MoU with Deutsche Bundesbank)


The development of the German banking supervisory system (3a)


The development of the German banking supervisory system (3b)


The development of the German banking supervisory system (3c)



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

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)

30.03.2007 | Page 19

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“<<<<<


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)

30.03.2007 | Page 21

1998-2003

Ab 1998

Bundesbank and BaFin - Early Warning System

30.03.2007 | Page 22


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

30.03.2007 | Page 23


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!


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


Qualification of Board of Directors

- Personal reliability

- Professional qualification:

- theoretical knowledge- managerial experience- experience in guidance of persons


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

Content




3. International co-operation between Bundesbank and

BaFin in the European- and the worldwide supervisory

level


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

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


ECB

National banking-superv.

All banks in Euro-zone

Worldwide co-operation (Different co-ordination levels)

30International cooperation of central banks

National

level

European

level

International

level

Degree of formality

| 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]

Documents

BaFin‘s Supervisory Tasks an Overviewgogov.org.ua/wp-content/uploads/2016/05/BaFin-s... · 2016. 5. 30. · Banking Supervision Directorate •Licensing, revocation and limitations