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 profitability of small and medium-sized banks and savings banks (less significant institutions, LSIs) in Germany is low. The prospect of a prolonged period of historically low interest rates makes it very likely that profitability will decrease further. This was shown by the recent survey carried out by the Deutsche Bundesbank and the Federal Financial Supervisory Authority (BaFin) on the earnings situation and the resilience of German credit institutions in the low interest rate environment.

The consolidation process in the German banking sector continued in 2018. However, the number of institutions did not fall as steeply as in the year before on account of new additions in the context of banks operating in Europe and on the international stage preparing for Brexit. Over the course of the year, the overall number of credit institutions fell by 40 to 1,783. This corresponds to a 2.2% decline compared with a drop of 3.4% in 2017. 

The Deutsche Bundesbank hosts the Bundesbank symposium "Banking supervision in dialogue" annually, with the aim of promoting the exchange of information on current topics relating to banking supervision within the banking industry. The next symposium will take place on 5 May 2020 in Frankfurt am Main, congress centre "Kap Europa".

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.