Cooperation with the Federal Financial Supervisory Authority
Banking supervision in Germany is carried out by the Bundesbank in cooperation with the Federal Financial Supervisory Authority (BaFin) and the Federal Ministry of Finance as well as external auditors and audit offices of the banking associations. Since November 2014, the European Central Bank (ECB) has also acted as a banking supervisory authority under the Single Supervisory Mechanism (SSM). As a general rule, it exercises the tasks conferred upon it in this context for all institutions in the euro area. In Germany, this includes all credit institutions that engage in both lending and deposit business, i.e. primarily the universal banks.
The cooperation between BaFin and the Bundesbank in terms of ongoing supervision of institutions is regulated in Section 7 (1) of the German Banking Act (Kreditwesengesetz). This states that the Bundesbank is responsible for the vast majority of operational banking supervision, ie evaluating the documentation submitted by institutions, audit reports and annual financial statements as well as performing and evaluating on-site inspections. In addition to this, BaFin's guidelines on ongoing supervision are issued in agreement with the Bundesbank pursuant to Section 7 (2) sentence 2 of the Banking Act. This is intended to produce harmonised and high-quality banking supervision and to ensure a transparent and unambiguous division of tasks.
The Bundesbank is, moreover, helping to develop international rules, such as Basel III, and is involved in international supervisory cooperation, for instance as part of supervisory colleges. On top of that, the Bundesbank also has an important role to play in crisis management. It is therefore involved in virtually all areas of banking supervision.
At the national level, BaFin is primarily responsible for sovereign functions in its area of banking supervision. This covers all legal acts as well as, in individual cases, issuing general regulations – provided the ECB is not responsible. The ECB is responsible for authorisation decisions and decisions on qualifying holdings relating to all deposit-taking credit institutions.