Ongoing supervision of institutions overseen directly by the Federal Financial Supervisory Authority (BaFin) and the Deutsche Bundesbank is a task performed by the Deutsche Bundesbank’s nine regional offices located close to the institutions across Germany. In operational terms, ongoing supervision involves evaluating documentation, reports, annual financial statements and audit as well as inspection reports, requesting of further information and, on the basis of the data collected, assessing the supervised institutions’ current and potential risks. The workload also includes conducting routine and, in consultation with BaFin, ad hoc supervisory meetings with respective institutions.

The Deutsche Bundesbank’s supervisors keep track of the institutions’ solvency and liquidity adequacy, and their risk situation, at all times. Evaluation criteria include not only the size and structure of the risks the institutions take, but also the adequacy of the respective risk management. Other quantitative and qualitative aspects, such as business model sustainability and the internal organisational structure, also play an important role in prudential supervision.

For LSIs and non-CRR credit institutions, supervisors use the evaluations they make as part of their ongoing supervision duties as inputs in the comprehensive risk classification, review and evaluation (the supervisory risk analysis) they regularly prepare for each institution. If they see any need for prudential action, they will make suitable proposals to BaFin.

In the JSTs, these tasks are performed in the same way by the ECB with the support of the Deutsche Bundesbank together with the other national competent authorities. The power to take decisions lies with the ECB.

Further ongoing supervisory duties include performing prudential inspections. These give the Deutsche Bundesbank deeper insights into institutions’ risk structures as well as risk control and management processes. The Deutsche Bundesbank’s supervisors also investigate whether the internal risk measurement methods which institutions use to calculate their capital requirements can be approved. They furthermore examine the existing and potential risks stated by institutions’ business models, though they must stay neutral as regards the choice of business model. Especially regarding inspections of significant institutions supervisors are drawn from various national authorities and the ECB to form the inspection team and examine institutions in Germany and further afield.