Priorities of banking supervision in 2019
Every year, BaFin and the Deutsche Bundesbank draw up their priorities for the supervision of less significant institutions (LSIs) in Germany. This is intended to ensure the effective and efficient use of resources, especially in terms of risk-oriented supervision.
For 2019, BaFin and the Bundesbank have identified six key risks for the German LSI sector. These are:
- Profitability risk
- Interest rate risk
- Digitalisation/IT risk
- Credit risk (including developments in the real estate sector)
- Country risk
- Legal and reputational risk
Banking supervision identifies, evaluates and prioritises all relevant prudential topics for setting supervisory priorities. During the selection process, they focus on topics which come up in everyday operational supervision. Moreover, the process also captures aspects which are of particular overall regulatory or strategic interest for the sector.
For 2019, therefore, two supervisory priorities have been determined:
- LSI stress test to be conducted in 2019 with an assessment of the impact on profitability and interest rate risks
- Inspecting IT systems and related IT processes.
If the operating environment changes, banking supervision will take this into account.