Tag Archives: BaFin

Berlin hired a Swiss regulator to lead Germany’s financial supervisor | Instant News


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.

FILE PHOTOS: Chief Executive of the Swiss Financial Markets Supervisory Authority (FINMA) Mark Branson attends a press conference in Bern, Switzerland March 27, 2018. REUTERS / Stefan Wermuth

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

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German court ordered the closure of Greensill Bank, following British parents’ bankruptcy filing News | DW | Instant News


A German court appointed a bankruptcy administrator for Greensill Bank on Tuesday, as requested by BaFin, Germany’s formerly criticized financial regulator.

Specialist lawyer Michael Frege will close the bank, reportedly with € 3.6 billion ($ 4.3 billion) at stake from depositors attracted by margins above Europe’s negative interest rates.

The previously unknown Bremen Bank went into bankruptcy last week after Greensill Capital, a British-Australian financier headquartered in London, lost insurance coverage for its short-term debt repackaging business.

These financial services are used by industrial clients, where Greensill converts their supply chain debt into complex products that are sold to large investors.

Customers, mostly private, have their hopes in Germany’s mandatory banking sector guarantee system for personal deposits of up to € 100,000 each.

Reuters, citing Germany’s BdB banking federation, reports that the Bremen bank is a member of the system, with probable damages of € 3.1 billion, the second highest in Germany – since Frege acted on creditors stuck in 2008 crsh from financial services company Lehman Brothers AS.

But concerns are held by about 30 cities about the deployment which now amounts to € 328 million, according to deposit comparison, the German portal for short-term deposits.

Deposit exposure despite having expertise

Among the institutional investors exposed were municipalities Monheim, near Düsseldorf, and Eschborn, near Frankfurt, Germany’s two financial centers, but alsoBad Durrheim, a town of 13,400 people near the Black Forest.

The German state of Thuringia has also disclosed that it is a customer of Greensill Bank.

For BaFin supervisors, already faces scrutiny in parliament over the German Wirecard scandalThe Greensill case was once again “not a pretty show,” said Michael Peters of Finanzwende (financial circle), a citizen movement.

“After Wirecard, we have the next billion euro scandal,” said Peters, noting that BaFin’s surveillance came too late instead of being proactive with “shadow banks.”

The sluggish response to private bank Bremen has been debunked by supervisor BaFin in Bonn, which suspended its customer transactions on March 3, warning of impending risks.

BaFin said it began investigating the private bank in early 2020 and appointed a special commissioner in January 2021, but in secrecy required by law.

Echoes of the US subprime disaster?

The model has “echoes of the repackaged US subprime debt that triggered the 2008 global financial crisis,” the French news agency AFP said last week.

A client of Greensill, the steelmaking giant GFG Alliance, which is owned by British India-British monarch Sanjeev Gupta, said on Monday it was halting some UK activities to save money. GFG also operates three major steel sites in France.

AFP quoted Frankfurt-based investment attorney Klaus Nieding on Tuesday as saying fixed-term deposits collected by Greensill Bank in Bremen were used to finance a Greensill Capital holding transaction.

Credit Suisse was also affected

From Zurich, Credit Suisse said it also “will be charged a fee” for financial notes bought from British firm Greensill and marketed to its clients.

Greensill founder Lex Greensill in London court documents filed earlier last week, quoted by Reuters, said he had kept senior individuals at Credit Suisse informed about the company’s insurance coverage in the “weeks” leading up to his UK engagement application.

Without that insurance, Greensill would no longer be able to sell debt-backed banknotes to investors, or fund clients like GFG Gupta, reported Reuters, citing London court documentation.

ipj / aw (Reuters, AFP, dpa)

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Germany’s chief financial regulator went after Wirecard | Instant News


FRANKFURT (Reuters) – Felix Hufeld will leave the leadership of German financial watchdog BaFin after coming under pressure for failing to spot mistakes ahead of the collapse of payments firm Wirecard.

FILE PHOTOS: Felix Hufeld, President of the German Federal Financial Supervisory Authority BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) visits Thomson Reuters offices in Frankfurt, Germany, September 22, 2016. REUTERS / Ralph Orlowski / File Photo

“The Wirecard scandal has revealed that German financial surveillance needs reorganization,” the finance ministry said in a statement.

The admission of the problem is a new allegation of German surveillance of a company that started with processing payments for gambling and pornography before becoming a “fintech” star – financial technology – and ultimately Germany’s biggest case of fraud.

The finance ministry said the decision to replace Hufeld was a joint decision and came ahead of the results of the ministry’s examination on the agency’s restructuring to be presented next week.

Calls for Hufeld’s resignation came on Thursday after BaFin reported one of his employees to prosecutors for alleged insider trading linked to Wirecard, shortly before the company broke up.

Hufeld said in a ministry statement that BaFin had grown in significance and relevance during his six years as president. “Now there are other tasks to be completed,” he said, wishing his successor the best.

In a separate statement, Bafin said the executive director of securities oversight, Elisabeth Roegele, would also step down by mutual agreement to make way for new leadership.

BaFin declined to comment further.

Olaf Scholz, Germany’s Minister of Finance, has also been criticized for being in charge of BaFin.

Fabio de Masi, a member of the German parliament who participated in the parliamentary inquiry into Wirecard, said Hufeld’s departure was “long overdue”.

“It cannot be explained why Mr. Scholz waited weeks and months to make this decision,” said de Masi.

Hufeld is expected to stay in charge until March 31 to ensure an orderly handover to the new leadership, said two people with knowledge of the matter.

The allegations of fraud at Wirecard have swirled for years, although BaFin and German prosecutors have long focused their investigations on investors and journalists who have highlighted irregularities.

As the company nearly collapsed, BaFin’s staff bought and sold its shares at higher volumes.

Reporting by Tom Sims and Patricia Uhlig; Additional reporting by Ludwig Burger; Edited by Kirsti Knolle, Frances Kerry and Alison Williams

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Wirecard scandal: Germany will replace chief financial supervisor | News | DW | Instant News


Felix Hufeld, head of the German financial controller BaFin, was replaced as the impact of the Wirecard scandal continues to grow.

Minister of Finance Olaf Scholz announced the move on Friday, saying it was part of an effort to overhaul the agency.

“The Wirecard scandal reveals that Germany’s financial regulator needs reorganization to fulfill its supervisory role more effectively,” said a ministry statement.

Scholz thanked Hufeld for his years of service, adding that the personnel reshuffle was a “new beginning” for regulators.

The ministry statement did not identify Hufeld’s successor.

The news came after BaFin announced one of its own employees is suspected of insider trading connected to the Wirecard collapse.

Regulator under attack

Digital payments company Wirecard was a rising star in the fintech sector before becoming one of Germany’s biggest fraud scandals.

In June last year, the company acknowledged that € 1.9 billion ($ 2.1 billion) of assets had not been discovered. The company filed for bankruptcy just days after the announcement.

Initial investigations suggest that the company may have been cooking its books since 2015.

BaFin is under immense pressure over the scandal, with regulators accused of poor oversight and missing warning signs that have allowed accounting fraud to continue for years.

A parliamentary committee has been tasked with finding out who knows what and when. Chancellor Angela Merkel and Minister of Finance Scholz will be criticized by lawmakers as part of the investigation.

rs / sms (AFP, dpa, Reuters)

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How the German SEC Refuses a Decade of Warnings About the Wirecard | Instant News


Germany’s top financial watchdog received detailed warnings about deceptive financial practices at Wirecard AG beginning in 2008 but repeatedly failed to investigate the allegations, and instead opposed the accusers.

For more than a decade, US investors, whistleblowers, authorities and journalists have warned of the possibility of accounting fraud or money laundering, practices that are now at the core of criminal investigations against humiliated fintech giants.

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