In June 2019, BaFin held its first global conference on technical cooperation. Around three dozen experts from around the world travelled to BaFin’s Frankfurt premises to gain an overview of financial supervision in Germany. The event focused on the work and structure of BaFin.

BaFin’s legal mandate and structure

Peter Kruschel, Head of BaFin’s Division for Technical Cooperation and Bilateral Affairs, highlighted the significance of the conference for BaFin in his opening speech. Under the German Act Establishing the Federal Financial Supervisory Authority (Finanzdienstleistungsaufsichtsgesetz – FinDAG), BaFin is tasked with supporting supervisory systems and central banks outside Germany in connection with their establishment and development. BaFin takes this task very seriously, Kruschel explained. This includes the provision of information to supervisory authorities in partner countries in the form of presentations, seminars and workshops, both on BaFin’s premises and at other authorities. Added to this are regular discussions on specific supervisory issues.

Kruschel’s colleague, Jochen Robert Elsen, explained how Germany’s financial supervisory authority and its integrated organisational structure came into being. BaFin was established in 2002, as a result of the merger of the Federal Banking Supervisory Office (Bundesaufsichtsamt für das Kreditwesen – BAKred), the Federal Securities Supervisory Office (Bundesaufsichtsamt für den Wertpapierhandel – BAWe) and the Federal Insurance Supervisory Office (Bundesaufsichtsamt für das Versicherungswesen – BAV). BaFin is “integrated” in a number of ways: in addition to supervision across all sectors of the financial market, BaFin combines micro-prudential and macro-prudential supervision and supervises compliance with rules of conduct. It has also been Germany’s national resolution authority since the beginning of 2018. These structural aspects were of great interest to the participants as potential structural reforms in financial supervision are currently the subject of debate in a number of countries. BaFin President Felix Hufeld considers that an integrated supervisory authority can recognise risks and interdependencies and assess their consequences for the different sectors more quickly than a sector-specific supervisory authority.

Solvency II, microinsurance and securities trading

The first day of the event focused on the European supervisory regime for insurers, Solvency II. The characteristic features of Solvency II include reporting requirements and quantitative and qualitative requirements for insurance undertakings. Overall, this extended and integrated supervisory system has been implemented with success in recent years and conveyed through in-depth dialogue, said Dr Jörg Krause (BaFin), as he addressed the participants who do not have the same system in their home countries.

In the area of microfinance, BaFin is exchanging ideas with the Initiative Access to Insurance (A2ii) (see May 2010 issue of BaFinJournal; only available in German). About ten years ago, A2ii set itself the target of establishing microinsurance in emerging markets in particular and to assist the supervisory authorities there with the creation of more favourable framework conditions.

BaFin’s securities supervision experts described what is crucial in the case of prospectuses for securities offered to the public. Investor protection plays an important role here; it is also a key focus of the Second European Markets in Financial Instruments Directive (MiFID II). For the participants from Africa and Asia, MiFID II turned out to be an interesting example of European regulation. Further details on how market manipulation and insider trading can be curbed in addition to the different sanctions that BaFin may impose were also provided afterwards.

Basel III and bank restructuring

On the second day, the event focused on banking supervision and the supervision of regional banks in particular. With this topic, BaFin offered a German perspective for the discussions on the global Basel III framework (see expert article on the BaFin website dated 5 January 2018), as regional banks play a more significant role in Germany – for historical reasons – than in some of the participants’ home countries.

The final part of the event covered issues surrounding bank restructuring. In response to the last financial crisis, the European Union introduced a bank recovery and resolution law regulating the restructuring of distressed banks and the shared responsibility of resolution authorities at national and EU level. The details of this were met with keen interest among the conference guests from outside Europe.

Representatives of financial supervisory authorities attended the international BaFin event on technical cooperation

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