A well functioning economy requires a stable banking system. Banking supervision is therefore responsible for monitoring credit institutions’ business activity and maintaining investor confidence. In Germany, the task of banking supervision is shared by the Bundesbank and the Federal Financial Supervisory Authority (BaFin). In particular, the Bundesbank is in charge of monitoring the credit institutions.
The consolidation process in the German banking sector continued in 2020 but at a slower pace than in the previous year. This was due, first, to a lower number of mergers in the savings bank and cooperative sectors and, second, to an elevated level of closures of British securities trading banks in 2019 on account of Brexit.
Ensuring internal capital adequacy of less significant institutions (LSIs)
The Bundesbank has conducted an analysis of how internal capital adequacy is ensured within the German banking market. The results are generally positive, but most of the institutions still show a need for further structural improvement.
Supervisory assessment of bank-internal capital adequacy concepts and their integration into firm-wide performance and risk management processes ("ICAAP") – realignment
Bundesbank and BaFin have jointly redrafted the 2011 ICAAP guideline and published it on 24.05.2018. The realignment of the paper was made necessary by developments at the global and European levels as well as ongoing changes in institutional and regulatory practices.