According to its boss Mark Branson, the financial regulator Bafin has achieved important milestones in the reform after the Wirecard scandal.
"For example, we have strengthened our money laundering prevention. We have completely integrated balance sheet control with Bafin," said the President of the Federal Financial Supervisory Authority (Bafin), who has been in office for a year, to the dpa news agency in Frankfurt. Supervision acts faster, more foresightedly, more courageously, more networked and more transparently. "So the direction is right, but we have ambitions to develop further everywhere."
Branson, who previously led the Swiss financial regulator Finma, took over the management of Bafin on August 1, 2021 from Felix Hufeld, who had to vacate his post in the wake of the Wirecard scandal. According to Branson, the Bafin has become bolder. "We are not afraid to intervene early if we have concerns about the stability or integrity of institutions or the financial system as a whole." Most of the preventive measures, however, had an effect without the public eye, and the successes of the supervisory authorities usually went unnoticed. "We're like the referees in football. You often only realize that we're acting when we've ratted out."
In the case of the payment service provider Wirecard, which had meanwhile been promoted to the Dax and then went bankrupt, neither the Bafin nor the auditors of EY had noticed the alleged billion-dollar fraud that had been going on for years.
Effects of the Ukraine War
The Federal Ministry of Finance, which is responsible for the Bafin, had launched a reform of the Bafin under the then head of department and current Chancellor Olaf Scholz (SPD) after the Wirecard scandal. The aim was to make the supervisory authority based in Bonn and Frankfurt more effective with more powers and rights of access. "Today we are much better prepared legally and organizationally and have also become more targeted and transparent in the control of the balance sheet," said Branson. However, even the Bafin will not be able to prevent criminal energy in companies.
According to him, the supervisory authority is currently keeping an eye on the economic risks from the Ukraine war and the energy supply problems that could spill over into the financial sector. Added to this is the turnaround in interest rates on the capital markets. "Now we're looking at where interest rate shocks could become dangerous. Stress tests are being carried out here," reported Branson. Bafin also pays particular attention to bank loans for residential and commercial real estate. "The corresponding loan portfolios are so large that we have to be vigilant."
The native Briton, who also has Swiss citizenship, is considered a knowledgeable and tough regulator. The former top manager of the major bank UBS switched to the Swiss financial regulator Finma in 2010 and has been its director since 2014. According to his will, the Bafin should “make significant progress” in a total of ten central topics over the next four years, as Branson announced in November. He set the bar high: "The Bafin should become a world-class supervisory authority."
