Topic Industry figures Credit institutions supervised by BaFin or the ECB
Content
Article from the Annual Report 2016 of the BaFin
Authorised institutions
In 2016 BaFin was responsible for supervising a total of 1,655 German credit institutions (previous year: 1,724) and 47 housing enterprises with savings schemes (previous year: 47, see Table 30).
Of the total of 1,655 credit institutions, 1,596 were CRR credit institutions (previous year: 1,665). Of these 1,596 CRR credit institutions, 1,530 (previous year: 1,598) were subject to direct supervision by BaFin as less significant institutions (LSIs) under the Single Supervisory Mechanism (SSM) (see info box "Definitions"). The 26 securities trading banks, 33 other credit institutions and 47 housing enterprises with savings schemes referred to in Table 30 were supervised exclusively by BaFin.
Table 30 German institutions
German institutions
* The SIs are supervised directly by the ECB. ** Two of these credit institutions provide financial market infrastructures and are therefore supervised by BaFin's Securities Supervision Directorate.
Source: BaFin
Definitions
A credit institution is an undertaking which conducts at least one of the banking businesses described in detail in section 1 (1) of the German Banking Act (Kreditwesengesetz) commercially or on a scale which requires commercially organised business operations. The banking businesses include the deposit business and credit business, but also specific securities-related activities such as principal broking services and the safe custody business.
Pursuant to section 1 (3d) of the Banking Act, a CRR credit institution is a credit institution that also meets the narrower definition of a credit institution in accordance with Article 4 (1) no. 1 of the EU Capital Requirements Regulation (CRR). CRR credit institutions are supervised in the context of the Single Supervisory Mechanism (SSM) either directly by the ECB as significant institutions (SIs) or by BaFin together with the Deutsche Bundesbank as less significant institutions (LSIs).
While the securities trading banks and the other credit institutions are not CRR institutions, they nevertheless fall within the German definition of a credit institution.
In accordance with section 1 (29) of the Banking Act, housing enterprises with savings schemes are undertakings with the legal form of a registered cooperative society, whose business object is principally the management of their own housing portfolios and which also conduct banking business solely in the form of deposit business, in a manner restricted by law. They have not been included in the credit institutions in this table.
German institutions directly supervised by the ECB under the SSM
66 of the German CRR credit institutions referred to in Table 30 (previous year: 67) were directly supervised by the European Central Bank (ECB) in 2016 as significant institutions (SIs) under the SSM. BaFin was and is involved in their supervision as part of the SSM.
Table 31 German institutions supervised by the ECB under the SSM
German institutions supervised by the ECB under the SSM
Source: BaFin
Calculation of the capital requirements
Use of IRB approaches
As at the 31 December 2016 reporting date, a total of twelve LSIs were using internal ratings-based (IRB) approaches for the purpose of calculating their capital requirements for credit risk. In contrast, none of these institutions and groups of institutions applied the internal assessment approach (IAA) for securitisation positions.
The IRB approach makes a distinction between whether, beyond its retail business, an institution estimates only the probability of default (foundation IRB approach) itself or whether it also estimates the loss given default and the conversion factor (advanced IRB approach). A total of four of the twelve institutions and groups of institutions referred to above used the advanced IRB approach on a group or individual basis, and three institutions applied the IRB approach on an individual basis exclusively for the risk positions arising from their retail business.
Operational risk approaches
The institutions or groups of institutions in Germany employed all four available approaches to calculate their capital requirements for operational risk during the year under review. The basic indicator approach (BIA) and the standardised approach (STA) are determined using the specified indicator, which is based on the statement of profit and loss figures. At the 2016 year-end, just under 1,600 institutions and groups of institutions – almost exclusively LSIs – were using the basic indicator approach. Another 54 institutions or groups of institutions, of which 26 were supervised by the ECB as SIs and 28 by BaFin as LSIs, were applying the standardised approach. Two LSIs were working with the alternative standardised approach (ASA), which uses a standardised earnings indicator instead of the specified indicator.
Instead of indicators, the advanced measurement approach (AMA) makes use of the actual loss experience, external data, scenarios and business environment and internal control factors of the institution itself. The capital requirement for the operational risk of an institution or group of institutions is calculated on the basis of this information with the help of a complex model. At the close of 2016, a total of 14 institutions and groups of institutions, of which three were LSIs, were applying an advanced measurement approach. The 14 institutions and groups of institutions that are permitted to use the AMA are mainly commercial banks; two belong to the group of savings banks, one institution is a cooperative bank and one is in the group of “Other institutions”.
As in previous years, BaFin focused on the institutions' procedures for measuring, controlling and monitoring legal and IT risks in 2016.
