On-site inspections

The ongoing monitoring of institutions also includes conducting on-site inspections. These give the Bundesbank deeper insights into institutions’ risk structures and the procedures they use to control risk. The Bundesbank’s supervisors investigate whether the internal risk measurement methods which institutions use to calculate their capital requirements can be approved. Inspections of significant institutions are notable instances where supervisors drawn from various national authorities and the ECB come together to form JSTs and examine institutions in Germany and further afield.

On-site inspections of less significant institutions are mandated by BaFin in accordance with Section 44(1) of the German Banking Act (Kreditwesengesetz). On-site inspections of significant institutions are mandated by the ECB.

The instructions to conduct inspections are given ad hoc or according to a fixed schedule drawn up using risk-based considerations. The content and scope of inspections is broad for significant and less significant institutions alike. Typical types of on-site inspection and areas of emphasis can be delineated as follows: