Stand:updated on 10.06.2021 Financial conglomerates
The supervision of financial conglomerates began when Directive 2002/87/EC of 16 December 2002 was adopted. New developments on the financial markets had allowed financial groups to form that offered their products and services in different financial sectors. A financial conglomerate is a group or subgroup formed of companies that operate both in the banking or investment sector and in the insurance sector. It was deemed necessary to supervise these financial groups at the conglomerate level in addition to solo and group supervision.
On 4 July 2013, the German Financial Conglomerates Supervision Act (Finanzkonglomerate-Aufsichtsgesetz – FKAG) came into force, which transposes Directive 2002/87/EC into German law. This Act brings together the provisions for the supplementary supervision of the financial companies in a financial conglomerate, which had previously been set out in the German Banking Act (Kreditwesengesetz – KWG) and the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG).
Key elements of conglomerate supervision include not only the assessment of the group’s financial situation, in particular its solvency, and the monitoring of risk concentrations and intra-group transactions, but also rules regarding sound administrative procedures.
Specific rules for calculating the solvency of financial conglomerates can be found in Circular 04/2018 (VA) and in Delegated Regulation (EU) No 342/2014. Delegated Regulation (EU) 2015/2303 contains more detailed provisions on the supplementary supervision of risk concentrations and intra-group transactions. Reporting templates for intra-group transactions, risk concentrations and the adequacy of own funds are currently being developed at European level.
For cross-border financial conglomerates, the provision that the necessary cooperation is to be carried out via colleges has been set out in section 4 (5) of the Financial Conglomerates Supervision Act (Finanzkonglomerate-Aufsichtsgesetz – FKAG) since 27 June 2013. The objectives of the cooperation essentially correspond to those described in the section on group supervision under the heading of colleges of supervisors.
