BaFin

Measures

For its solvency supervision purposes, BaFin has all regulatory decision-making powers. Measures to avert threats range from written warnings – known as serious objections – through administrative fines to withdrawal of a bank's authorisation to conduct banking business and closure of its business premises ("Moratorium").

If senior management lack the sufficient qualifications or personal reliability, BaFin may require of the supervisory board that they be removed from office and may replace them with a special commissioner. BaFin may also dismiss members of supervisory boards who lack the necessary expertise or reliability and transfer the supervisory powers to a special commissioner.

Moreover, BaFin has the right to order special inspections. These on-site inspections enable BaFin to gain deeper insight into the financial position, risk situation and organisation of a bank. BaFin can either give notice prior to such inspections or may pay a "surprise visit" to the bank.

On 1 January, the German Act on the Recovery and Resolution of Credit Institutions (Gesetz zur Sanierung und Abwicklung von KreditinstitutenSAG) and several accompanying acts came into effect. The SAG transposes the European Recovery and Resolution Directive, which itself implements in the EU the requirements of the Key Attributes of Effective Resolution Regimes, as defined by the Financial Stability Board (FSB) for credit institutions and investment firms (hereinafter: “institutions”). This is intended to facilitate the management of a crisis at an institution without jeopardising financial stability or falling back on taxpayers’ money.

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