Germany's new finance watchdog vows further supervision reforms
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[October 13, 2021] By
Tom Sims and Alexander Hübner
FRANKFURT (Reuters) -The new president of
Germany's financial watchdog BaFin on Wednesday vowed to make further
efforts to bolster supervision in Europe's largest economy amid
criticism that current overhaul efforts don't go far enough.
BaFin's reputation was battered after it failed to spot wrongdoing ahead
of the collapse last year of the German payments company Wirecard, a
former blue-chip hailed as a German success story and once worth $28
billion.
The implosion shocked investors, business and political leaders in
Europe's largest economy, and overshadowed the election campaign of
German Finance Minister Olaf Scholz, whose ministry oversees BaFin, as
he was seeking to succeed Chancellor Angela Merkel.
Scholz in response vowed to give BaFin "more bite", with a change in top
leadership and more powers to spot and investigate wrongdoing.
Mark Branson, in his first news conference since taking over the helm of
BaFin, said he was impressed by the speed and breadth of the reforms.
"But for me, this is only the beginning of BaFin's long-term
development," said Branson, who was poached for the job from
Switzerland's financial markets regulator. "It will take time before we
reach our objectives in all areas."
New measures enacted this year to bolster BaFin include the creation of
task forces to oversee companies with complex business models, more
in-house accounting firepower, and a reorganised unit for
whistleblowers.
In recent weeks, BaFin has announced an array of enforcement actions,
including a 4.25 million euro ($4.9 million) fine for online bank N26
for failures related to money-laundering prevention.
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![](../images/101321pics/2021-10-13T112126Z_2_LYNXMPEH9C0H8_RTROPTP_4_ALLIANZ-LITIGATION_small.JPG)
The logo of Germany's Federal Financial Supervisory Authority BaFin
(Bundesanstalt fuer Finanzdienstleistungsaufsicht) is pictured
outside of an office building of the BaFin in Bonn, Germany, April
15, 2019. REUTERS/Wolfgang Rattay
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It also ordered the Frankfurt subsidiary of Russian state-owned VTB Bank to fix
flaws in its controls, and it has delved into issues at fund managers DWS and
Allianz.
Activists and academics say it is too early to say whether the actions auger a
tougher, more proactive regulator.
"But the initial message to take action seems to have reached Bonn," where BaFin
is based, said Gerhard Schick, a former member of German parliament and a
finance activist at lobby group Finanzwende.
Still, BaFin's challenges loom large, experts say.
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Hans-Peter Burghof, a professor at the University of Hohenheim, said Branson is
a good fit for the job, but as a single person at the top of the institution
faces an uphill battle to enact change.
He needs a new crew of finance experts rather than a raft of lawyers, he added.
"A high level of crisis and loss of reputation might make the institution more
receptive to changes, but... they have this lawyer culture that will be very
hard to break. I think Branson has a very hard task".
($1 = 0.8650 euros)
(Reporting by Tom Sims and Alexander Huebner; Editing by Riham Alkousaa and Jan
Harvey)
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