Berlin keeps BaFin on a short leash

bn Frankfurt – The latest initiative by 25 central bankers and high-ranking supervisors across Europe for strict implementation of the Basel III banking regulations put Mark Branson in a difficult position immediately after taking office as President of the Federal Financial Supervisory Authority (BaFin). While the Bundesbank supports the open letter to EU Financial Market Commissioner Mairead McGuinness, BaFin is not on the list of its signatories. According to information from the Börsen-Zeitung, Branson would have supported the initiative after his predecessor Felix Hufeld had already decided against it. After consulting the Federal Ministry of Finance, he refrained from doing so. When asked on Thursday, BaFin “did not want to comment on the modalities of this letter”.

The episode raises the question of how Branson, who is supposed to get BaFin on course after the Wirecard scandal, can act as head of the authority under legal and technical supervision of the Federal Ministry of Finance – at EU level, the Federal Republic of Germany has with France, Denmark and Luxembourg open to the relief demanded by banks for the implementation of the global Basel III package of rules.

The regulations are likely to significantly increase the capital requirements for banks. The EU Commission’s proposal for implementation is expected at the end of October. In view of the political situation, France’s central bank governor François Villeroy de Galhau has also drawn attention to himself: He has also left the phalanx of signatories, but at the same time acts as chair of the steering committee (GHOS) of the Basel Committee on Banking Supervision, which drafted Basel III . Just last year he said that the GHOS members had unanimously confirmed that all aspects of Basel III should be implemented completely, promptly and consistently. GHOS will work to ensure uniform rules of the game for the industry worldwide and to avert fragmentation of the regulations. The Bank for International Settlements (BIS), seat of GHOS and the Basel Committee, referred to the Banque de France, which did not respond to a request at the time of going to press.

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