FRANKFURT (Reuters) – Mark Branson, Switzerland’s chief financial market regulator, will become president of German financial watchdog BaFin, the finance ministry said on Monday, as part of changes to regulators following Wirecard’s scam.
The current president of BaFin, Felix Hufeld, will leave at the end of the month after coming under pressure for failing to find fault with the bankruptcy of the payments company.
The former blue-chip explosion hailed as a German success story and once valued at $ 28 billion has embarrassed the government and damaged the country’s reputation.
German Finance Minister Olaf Scholz, whose ministry oversees BaFin, has responded by giving monitors more powers to look at and investigate abuses and seek new leadership.
Branson, the banker turned regulator, will help give BaFin “more bite,” said Scholz. “Trust in Germany’s financial center is important and BaFin is a key factor in that trust.”
Fraser Perring, an investor who highlighted mistakes at Wirecard only to be investigated by BaFin himself, said regulatory reform needed to do more than just change the president.
“This is cultural and deep-rooted protectionism,” he said, questioning Germany’s willingness to deal with this.
Switzerland’s reputation has been on the decline in recent years. The Financial Action Task Force, a global watchdog, last year condemned the country for deficiencies in tackling money laundering.
Swiss law, designed largely to protect banks, does not allow FINMA to impose fines, although regulators can take back profits from illegal activity.
“Regulations, whether money laundering or banks, are weak in Switzerland,” said Rudolf Strahm, an academic and former member of the Swiss parliament. But Branson is not to blame, he added.
“He is the toughest boss of regulators we have seen in Switzerland,” said Strahm. “But he doesn’t have the support of state politicians.”
Calls for Hufeld’s resignation came after BaFin in January reported one of his employees to prosecutors on suspicion of insider trafficking linked to Wirecard, shortly before the company broke up.
BaFin has recently faced criticism from German lawmakers and investors in connection with the downfall of the Greensill Bank.
Gerhard Schick, a financial activist with the Finanzwende lobby group and a former member of the German parliament, said: “Hats off!” for the appointment of an outside expert.
“But there are also giant projects ahead of Mr. Branson. “He has to turn the sleepy giant BaFin into a strong guardian of financial markets,” said Schick.
BaFin declined to comment.
Branson, who has Swiss and British citizenship, became head of FINMA in April 2014 after holding various positions there since 2010. Prior to that, he worked at Credit Suisse, SBC Warburg and UBS.
FINMA activities are largely discrete and slow-moving, sparking criticism for their lack of transparency.
It is still examining whether the failure of management controls at Credit Suisse allowed surveillance of former members of the executive board, months after the scandal sparked a management overhaul at the bank.
FINMA said Jan Bloechliger, head of its bank division, would take over the agency’s operational leadership from May 1 while looking for a replacement for Branson.
Reporting by John O’Donnell, Riham Alkousaa, Michael Nienaber, and Christian Kraemer; Additional reporting by Oliver Hirt, Michael Shields and Rene Wagner; Written by Maria Sheahan and Tom Sims; Edited by Kirsten Donovan and Jane Merriman