▷ Behind the wave, commentary on financial supervision by Bernd Neubacher


25.11.2021 – 20:49

Stock exchanges newspaper

Frankfurt (ots)

Is that still a fence post or is it already a sledge hammer that the Bundesbank waved with? After the presentation of the current financial stability report, there should be no longer any doubt that BaFin will reactivate the countercyclical capital buffer shortly. In the responsible Committee for Financial Stability (AFS), the Bundesbank only has a third of the votes, while BaFin and the Federal Ministry of Finance have a majority. Without having obtained a seat beforehand, Bundesbank Vice President Claudia Buch would never have leaned out the window like this on Thursday. BaFin President Mark Branson recently highlighted the stability risks emanating from real estate markets.

It’s about time. In its financial stability report last week, the ECB even more or less clearly highlighted Germany as the only country in the eurozone that has not yet tackled the boom in residential property prices with macroprudential supervisory instruments. For the banks, which, unsurprisingly, do not appreciate the supervision’s expectation management, this will mean building up around EUR 5 billion in additional core capital. In any case, this applies if the information provided by BaFin from May 2019 is used as a basis, when the buffer was already increased from zero to 0.25 basis points to the specified extent.

Safe: In conjunction with the conclusion of Basel III, which will demand a further 20 billion in equity capital from the institutes in the coming years, this can, for example, strike disproportionately badly affected mortgage banks into the office. On the other hand, the excess capital in the German banking sector is estimated at around 165 billion euros – the buffer will therefore hardly be able to jeopardize the supply of credit. In addition, the countercyclical additional requirement is only the downside of a bombshell market that has been generating steadily bubbling income for the banks for years, but now harbors risks.

Precisely because the need to reactivate the buffer is beyond question, what has happened to the Financial Stability Committee seems all the more grotesque. Not even when the macroprudential supervisory specialists are planning to meet is not revealed. If the result of the consultation is already whistling the sparrows from the roofs and only the time of the announcement creates tension, something is not only going wrong in the external presentation. Then it is also clear that Germany’s financial regulator has got behind the wave.

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