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Banking in Frankfurt, Germany – Part 4: Banking Regulation and Supervision in Germany

Banking In Frankfurt, Germany – Part 4: Banking Regulation And Supervision In Germany
Beitragsserien: Banking in Frankfurt

Dear London bankers, we hope you will enjoy our little series of posts about Banking in Frankfurt, Germany! In the fourth part we will talk about Banking Regulation and Supervision in Germany.

Banking Supervision in Germany

By now, we showed you what living in Frankfurt is like and what you have to expect when relocating to the city. We also gave you a sneak peek at the role of Frankfurt as a financial centre in Europe. Now, in the concluding part to our series, we will talk banking regulation in Germany.

Dear London Bankers!

It’s a done deal now that Great Britain is going to leave the EU, and we are all really sad to lose one of our favourite rivals in football as well as business. Nevertheless, it doesn’t hurt to look forward. So, since we suspect to see some of you in Germany soon, we will try to compile a comprehensive source of information on relocating to, as well as working and living in Frankfurt, Germany. The fourth part will be complicated, though! It’s about banking regulation in Germany.

European Directives and the German Law

As you know, there are lots of directives and regulations that are implemented by the European Union. They were one of the main reasons people voted „Leave“ in the Brexit referendum. Unfortunately, for companies that still want to do business in the EU the directives won’t suddenly disappear. And on top of that, especially if you want to do banking in Germany, there are numerous directives that interact with the German law, which in itself is infamous for being bloated and very complicated.

This means one thing in particular: we will not be able to give you a complete overview over every law that affects banking in Germany. (There are over 190 of them!) What we can do, however, is give you an idea of the most important ones and show you the institutions responsible for banking supervision in our country.

The main laws that are the basis for banking regulation in Germany

…are essentially the „Kreditwesengesetz“ (KWG), which is the German banking law, the European Capital Requirements Regulation (CRR), the Single Supervisory Mechanism (SSM) which defines the duties of the ECB, and a collection of orders that are issued by the German federal financial supervisory agency.


The „Kreditwesengesetz“ (KWG) – The „German banking law“

The German banking law has existed for a long time. Since 1935, to be precise. But it is being updated regularly, and the latest amendment was finalised just two weeks ago. It also had to be revised more thoroughly when the CRR was implemented.

The main goal of the KWG is to guarantee and safeguard the functionality of banks in Germany as well as to safeguard the creditors from losing their capital. It is the legal justification for most of the German banking requirements, regulations and other laws.

It essentially consists of eight main sections that define:

  • general rules and regulations,
  • specific rules for financial institutions,
  • rules for the supervision of financial institutions,
  • as well as special rules for certain kinds of institutions other than banks.
  • Also there are penal provisions and provisions concerning fines.

The KWG is also the basis for complementary regulations concerning solvability (SolvV), risk management requirements (MaRisk) and others.

We know this is complicated, so we would invite you to visit our seminar on Banking Business in Germany if you want to learn more. There is a whole day dedicated to the most important information on this topic.


Banking Supervision in Germany

In Germany there are two main institutions that share the duty of banking supervision. First, there is the „BaFin“, or the „Federal Financial Supervisory Authority“, and then there is the German Federal Bank. Without going into too much detail, the BaFin is the main administrative authority in this regard. Bafin is responsible for formulating the guidelines for banking supervision in Germany and the Federal Bank assists them in the ongoing supervision by analysing reports and returns, as well as assessing the adequacy of submissions from banks on capital and risk management procedures. You can find the guidelines for these processes online and in English, by the way.

So, about Relocating to Germany

Altogether, we admit that this is a very complicated topic. Probably you have even more questions after reading this short blog post. Because of that, we recommend visiting our seminar on Banking in Germany. There is a whole day dedicated to the topic of banking in Germany.

Also, we comprised a nice little presentation about the reasons why you just might like it over here. Feel free to browse through it, you might be surprised…

We hope you enjoyed our little series and stay tuned for more content!


10 Reasons You Won’t Hate Living in Frankfurt

Download our tongue-in-cheek list of 10 reasons you just might love banking in Frankfurt, Germany. Hopefully, you'll enjoy our attempt at German "humour" and find some valuable information in it.
Download now!
Bild von Frankfurt aus der Luft

Download Programm: Seminar Banking Business in Germany

Seminar on banking in and relocating to Germany. Everything about relocation, regulation and living in the Rhein-Main region.
Download now!

Christoph Erle

Mein Name ist Christoph Erle und ich betreue bei Management Circle die Blogs zu Personalwesen, Banken, Energiewirtschaft und Handelsmarken. Als langjähriger Freund des Netzes und Content-Marketing-Spezialist wollte ich mir die Chance nicht nehmen lassen, bei einem renommierten Veranstalter den Aufbau einer Online-Präsenz zu unterstützen. Ich hoffe, hier hilfreiche Inhalte für Sie bereitzustellen und Sie demnächst im Netz oder auf einer unserer Veranstaltungen anzutreffen.

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