According to its boss Mark Branson, the financial regulator Bafin has achieved an important step in the reform after the Wirecard scandal.
“For example, we have strengthened our protection against money laundering. We have fully integrated balance sheet control with Bafin,” the President of the Federal Financial Supervisory Authority (Bafin), who has been in office for one year, told the dpa news agency in Frankfurt. Management works faster, with more foresight, with confidence more, more networked and more transparent. “So the trend is the same, but we have expectations everywhere to develop further.”
Branson, who previously headed the Swiss financial regulator Finma, took over the management of Bafin on August 1, 2021 from Felix Hufeld, who was forced to leave his post due to the Wirecard scandal. According to Branson, Bafin has become more confident. “We are not afraid to intervene early if we are concerned about the stability or integrity of an institution or the financial system as a whole.” However, many preventive measures had an effect without the public eye, and the success of the supervisory authority was usually not considered. “We are like referees in soccer. The fact that we are acting is often only discovered when we have memorized it.
In the case of payment service provider Wirecard, which at the time was promoted to Dax and then went bankrupt, neither Bafin nor EY auditors had seen the alleged multi-billion dollar fraud that had been going on for years.
Consequences of the Ukraine War
The Federal Ministry of Finance, which is responsible for Bafin, had launched the reform of Bafin under then head of department and current Chancellor Olaf Scholz (SPD) after the Wirecard scandal. The aim was to make the supervisory authority in Bonn and Frankfurt more efficient with more powers and rights to reach. “Today we are better equipped legally and organizationally and we have also focused more and more clearly on balance sheet control,” said Branson. However, even Bafin will not be able to stop the criminal energy in the company.
According to him, the supervisory authority is currently taking into account the economic risks due to the war in Ukraine and the problems of energy supply that may spread to the financial sector. Added to this is the change in interest rates on the capital markets. “Now let’s see where the interest rate shock can be dangerous. The stress tests are going on here,” reported Branson. Bafin also pays special attention to bank loans for residential and commercial real estate. “The equivalent credit positions are so big that we have to be vigilant.”
The native Briton, who also holds Swiss citizenship, is considered a skilled and tough regulator. The former general manager of the central bank UBS changed the Swiss financial regulator Finma in 2010 and has been its director since 2014. In a total of ten central areas, Bafin will make “great progress” in the next four years, as Branson announced in November. He set the bar high: “Bafin should be a world-class management authority.”
© dpa-infocom, dpa:220731-99-219343/2 (dpa)