Key regulatory developments in Germany

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EU Banking and Finance Regulatory Newsletter September 2023 - January 2024
Key regulatory developments in Germany

Key regulatory developments in Germany

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January 29, 2024

Source/Date	Brief description
Federal Financial Supervision Authority (BaFin) January 5, 2024	Cooperative banks: BaFin publishes new general ruling on Common Equity Tier 1 instruments BaFin published a general ruling on the extent to which newly issued shares in cooperative banks (Genossenschaftsbanken) can be classified as Common Equity Tier 1 instruments subject to their authorization. The general ruling only applies to cooperative banks that are not subject to direct supervision by the ECB. The background is the provisions of the Capital Requirements Regulation (CRR), which the European Commission has issued for the requirements for own funds. More information (in German) is available here.
Federal Financial Supervision Authority (BaFin) December 22, 2023	Sustainable Finance: New section on BaFin website Due to the increasing importance of environmental, social and governance issues (ESG) for the financial sector, BaFin has published a dedicated section on its website where interested parties can find out about topics such as the EU Disclosure Regulation, the EU Taxonomy Regulation, greenwashing, etc. The main reason for this new section is BaFin's own sustainable finance strategy, which it adopted in July 2023. More information (in German) is available here.
Federal Financial Supervision Authority (BaFin) December 11, 2023	Two new regulations on investment firms published The Investment Firm Disclosure Regulation (Wertpapierinstituts-Anzeigenverordnung – WpI-AnzV) and the Investment Firm Audit Report Regulation (Wertpapierinstituts-Prüfungsberichtsverordnung – WpIPrüfbV) were published in the German Federal Law Gazette and entered into force on December 12, 2023. The WpI-AnzV stipulates which documents must be submitted for notifications under the German Investment Firms Act (Wertpapierinstitutsgesetz – WpIG), e.g., for notifications of qualifying holdings or license procedures. The WpIPrüfbV, on the other hand, contains provisions on the auditing of annual financial statements and on other reports which must be provided by investment firms, e.g., on risk management, business organization, etc. The regulations are available (in German) here and here.
Federal Financial Supervision Authority (BaFin) December 4, 2023	Three new circulars on professional suitability and reliability BaFin published three circulars on the professional suitability and reliability of persons who are supervised by BaFin in accordance with the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG). The circulars address members of the management and administrative and supervisory bodies as well as persons who fulfil key tasks in insurance undertakings. The circulars replace the previous versions from 2018, which had been updated and further developed in the past. Among other things, companies must now set out specific requirement profiles for the positions to be filled and also justify why a candidate is suitable for the position in question. More information (in German) is available here.
Federal Financial Supervision Authority (BaFin) December 1, 2023	Interactive information sheet on sustainable financial products BaFin, other national supervisory authorities and the three European supervisory authorities (EBA, EIOPA and ESMA) published an interactive information sheet in all EU languages on sustainable financial products. The information sheet focuses on sustainable financial products and explains technical terms in a simple way. The aim is to help consumers understand how their financial decisions can contribute to a more sustainable future. More information (in German) is available here.
Federal Financial Supervision Authority (BaFin) October 30, 2023	BaFin publishes circular on monitoring of banking products BaFin published a circular on the monitoring and governance of banking products in the retail banking business, which must be complied with from May 1, 2024. By way of background, the circular implements the EBA's guidelines on the supervision and governance of retail banking products and is aimed at product manufacturers and distributors and sets out how they must monitor banking products and organize their governance. It relates, in particular, to (real estate) consumer loans, deposit products and payment services. More information (in German) is available here.
Federal Financial Supervision Authority (BaFin) October 20, 2023	Three circulars aim to improve settlement capability BaFin consults on three draft circulars on improving the resolvability of institutions. Two drafts are extensions of a previous version (MaAbwicklungsfähigkeit, MaBail-in) while the third circular contains new requirements for the operationalization of resolution tools that provide for transfers (MAStrukturelle Abwicklungsinstrumente). Among other things, the third circular implements EBA's guidelines on transferability into BaFin's national administrative practice. More information (in German) is available here.
Federal Ministry of Finance (Bundesministerium der Finanzen) October 11, 2023	New German law promotes organized secondary credit markets The law promotes the reduction of non-performing loan positions in bank balance sheets, and the new harmonized requirements of the EU directive create a uniform European framework for the purchase of non-performing loans. The requirements guarantee a high level of protection for debtors that is already largely standard for debt collection service providers in Germany. The law also contains regulatory requirements for service providers acting on behalf of purchasers of non-performing loans and places them under BaFin's supervision. More information (in German) is available here.
Federal Financial Supervision Authority (BaFin) October 10, 2023	PSD2/ZAG: BaFin consults on circular on reporting risks in payment transactions Under the Services Directive 2 (PSD 2) and the German Supervision Act (Gesetz über die Beaufsichtigung von Zahlungsdienstleistern, ZAG), payment service providers are obliged to report their operational and security-related risks to BaFin. As part of their report, they must assess whether their risk minimization measures and control mechanisms are appropriate. The circular submitted for consultation consists of an attached form that should be used for future notifications to BaFin and deals with the reporting of operational and security-related risks. More information (in German) is available here.
Federal Financial Supervision Authority (BaFin) October 5, 2023	New instructions for applications and enquiries to the insurance supervision BaFin has published new information for companies wishing to submit an application or enquiry to the insurance supervision. Companies should familiarize themselves in advance with the legal and supervisory issues relating to their requests. To meet BaFin's new requirements, the most important information in the documents must be clearly recognizable and easy for third parties to understand. More information (in German) is available here.
Federal Financial Supervision Authority (BaFin) September 27, 2023	ZAG-MaRisk: BaFin consults on circular BaFin is consulting on a draft circular on minimum requirements for the risk management of payment service providers under the German Payment Supervision Act (Gesetz über die Beaufsichtigung von Zahlungsdienstleistern, ZAG). The circular will provide institutions with a flexible and practical framework for proper business organization and will also define security requirements for the acceptance funds (Sections 17 and 18 ZAG) and outsourcing (Section 26 ZAG). More information (in German) is available here.

Source/Date

Brief description

Federal Financial Supervision Authority (BaFin)

January 5, 2024

Cooperative banks: BaFin publishes new general ruling on Common Equity Tier 1 instruments

BaFin published a general ruling on the extent to which newly issued shares in cooperative banks (Genossenschaftsbanken) can be classified as Common Equity Tier 1 instruments subject to their authorization. The general ruling only applies to cooperative banks that are not subject to direct supervision by the ECB. The background is the provisions of the Capital Requirements Regulation (CRR), which the European Commission has issued for the requirements for own funds.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

December 22, 2023

Sustainable Finance: New section on BaFin website

Due to the increasing importance of environmental, social and governance issues (ESG) for the financial sector, BaFin has published a dedicated section on its website where interested parties can find out about topics such as the EU Disclosure Regulation, the EU Taxonomy Regulation, greenwashing, etc. The main reason for this new section is BaFin's own sustainable finance strategy, which it adopted in July 2023.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

December 11, 2023

Two new regulations on investment firms published

The Investment Firm Disclosure Regulation (Wertpapierinstituts-Anzeigenverordnung – WpI-AnzV) and the Investment Firm Audit Report Regulation (Wertpapierinstituts-Prüfungsberichtsverordnung – WpIPrüfbV) were published in the German Federal Law Gazette and entered into force on December 12, 2023. The WpI-AnzV stipulates which documents must be submitted for notifications under the German Investment Firms Act (Wertpapierinstitutsgesetz – WpIG), e.g., for notifications of qualifying holdings or license procedures. The WpIPrüfbV, on the other hand, contains provisions on the auditing of annual financial statements and on other reports which must be provided by investment firms, e.g., on risk management, business organization, etc.

The regulations are available (in German) here and here.

Federal Financial Supervision Authority (BaFin)

December 4, 2023

Three new circulars on professional suitability and reliability

BaFin published three circulars on the professional suitability and reliability of persons who are supervised by BaFin in accordance with the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG). The circulars address members of the management and administrative and supervisory bodies as well as persons who fulfil key tasks in insurance undertakings.

The circulars replace the previous versions from 2018, which had been updated and further developed in the past. Among other things, companies must now set out specific requirement profiles for the positions to be filled and also justify why a candidate is suitable for the position in question.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

December 1, 2023

Interactive information sheet on sustainable financial products

BaFin, other national supervisory authorities and the three European supervisory authorities (EBA, EIOPA and ESMA) published an interactive information sheet in all EU languages on sustainable financial products.

The information sheet focuses on sustainable financial products and explains technical terms in a simple way. The aim is to help consumers understand how their financial decisions can contribute to a more sustainable future.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

October 30, 2023

BaFin publishes circular on monitoring of banking products

BaFin published a circular on the monitoring and governance of banking products in the retail banking business, which must be complied with from May 1, 2024. By way of background, the circular implements the EBA's guidelines on the supervision and governance of retail banking products and is aimed at product manufacturers and distributors and sets out how they must monitor banking products and organize their governance. It relates, in particular, to (real estate) consumer loans, deposit products and payment services.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

October 20, 2023

Three circulars aim to improve settlement capability

BaFin consults on three draft circulars on improving the resolvability of institutions. Two drafts are extensions of a previous version (MaAbwicklungsfähigkeit, MaBail-in) while the third circular contains new requirements for the operationalization of resolution tools that provide for transfers (MAStrukturelle Abwicklungsinstrumente). Among other things, the third circular implements EBA's guidelines on transferability into BaFin's national administrative practice.

More information (in German) is available here.

Federal Ministry of Finance (Bundesministerium der Finanzen)

October 11, 2023

New German law promotes organized secondary credit markets

The law promotes the reduction of non-performing loan positions in bank balance sheets, and the new harmonized requirements of the EU directive create a uniform European framework for the purchase of non-performing loans. The requirements guarantee a high level of protection for debtors that is already largely standard for debt collection service providers in Germany.

The law also contains regulatory requirements for service providers acting on behalf of purchasers of non-performing loans and places them under BaFin's supervision.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

October 10, 2023

PSD2/ZAG: BaFin consults on circular on reporting risks in payment transactions

Under the Services Directive 2 (PSD 2) and the German Supervision Act (Gesetz über die Beaufsichtigung von Zahlungsdienstleistern, ZAG), payment service providers are obliged to report their operational and security-related risks to BaFin. As part of their report, they must assess whether their risk minimization measures and control mechanisms are appropriate. The circular submitted for consultation consists of an attached form that should be used for future notifications to BaFin and deals with the reporting of operational and security-related risks.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

October 5, 2023

New instructions for applications and enquiries to the insurance supervision

BaFin has published new information for companies wishing to submit an application or enquiry to the insurance supervision. Companies should familiarize themselves in advance with the legal and supervisory issues relating to their requests. To meet BaFin's new requirements, the most important information in the documents must be clearly recognizable and easy for third parties to understand.

More information (in German) is available here.

Federal Financial Supervision Authority (BaFin)

September 27, 2023

ZAG-MaRisk: BaFin consults on circular

BaFin is consulting on a draft circular on minimum requirements for the risk management of payment service providers under the German Payment Supervision Act (Gesetz über die Beaufsichtigung von Zahlungsdienstleistern, ZAG). The circular will provide institutions with a flexible and practical framework for proper business organization and will also define security requirements for the acceptance funds (Sections 17 and 18 ZAG) and outsourcing (Section 26 ZAG).

More information (in German) is available here.