Management of Banks - PwC Establishment of Banks Blog

Changes of Reporting Duties (Part 1)

Extended Reporting Requirements based on the ‘Financial Information Regulation’

Within the context of the establishment of a credit or financial institution the proper compliance with the German reporting regulations has to derive already from the respective application documentation. That means, one should deal with the German reporting duties at a very early stage. Even EU-Branches pursuant to Sect. 53b German Banking Act should be aware of German reporting requirements since they are also obligated to submit regulatory reports to a certain extent.

Trends for the Formation of Development Banks Abroad – Part 2

The support of development banks in countries which are further developed regarding industry and infrastructure is frequently aimed at the financial assistance of SME’s (Small and Medium Enterprises) as they often serve as an economic pillar with regard to the middle class of the respective country. Additionally, development banks grant means to foster innovations, to encourage exports or to subsidize municipalities and regional projects such as the expansion of infrastructure and environmental protection etc. .

An own development bank is a very sustainable instrument in order to strategically set up and establish the support in a country.

Trends for the Formation of Development Banks Abroad – Part 1

We observe plans and concepts that are associated with start-up activities of development banks abroad.

Thereby, the fundamental goal is to promote industrial development and boost economic growth in order to stabilize the country in the long-run but also to act sustainably.

There are different programs depending on the level of development and needs of the country. Thus, the arrangement of these programs may vary from country to country. In order to support developing countries there are often cross-regional development banks focusing on the promotion of a particular region. By using funds the development bank aims at fulfilling the basic needs in the respective regions and then subsequently achieve an effective use of own resources in order to ultimately become more competitive in terms of global trade.

3rd edition of Banking Business in Germany is now available as an eBook

The third edition of this practical guide on establishing a bank in Germany has been edited by Jens Rönnberg (PwC) and Dr Oliver Wagner (Association of Foreign Banks in Germany).

The authors Christian Wilhelm Baumann, Sascha Demgensky, Dr Nicole Elert, Markus Erb, Christina Grulke, Eva Handrick, Holger Junghanns, Dr Eric Krause, Marco Libudda, Hartmut Liehr, Jens Marth, Dr Angelika Meyding-Metzger, Thomas Karl Otto, Martina Rangol, Kristina Rölver, Jens Rönnberg, Alice Dagmar Romisch, Dr Martin Schulte, Dr Jörg Schwerdtfeger, Marc Seedorf, Hiltrud Thelen-Pischke, Wolfgang Vahldiek, Dr Oliver Wagner, Christian Wettlaufer, Christine Wicker, Daniel Wildhirt, Rainer Wilken, Maxi Wilkowski and Herbert Zerwas have revised and expanded this edition.

Banking Business in Germany – 3rd edition, revised and expanded – now available

I am proud to announce that the latest, the 3rd, edition of "Banking Business in Germany" is now available. Also the new edition was developed in close cooperation between the Association of Foreign Banks in Germany (Verband der Auslandsbanken in Deutschland e.V.) and PwC and, like the former editions, is endorsed by the State-Government of Hesse.

The book's subtitle tries to explain its ambition in one short sentence:

"A practical guide for foreign banks establishing a subsidiary or a branch in Germany"

LEAN – right from the start

The term lean management is often associated with the increase of efficiency and cost reduction measures in Germany. Why should a financial institution already consider lean management as a method at the very moment of a bank formation?

Lean management implies much more than cost cutting, redundancies and outsourcing of processes and functions. From our point of view lean management stands for establishing a corporate culture which aligns all the activities of a company with their clients’ needs and continuously improves these activities.

Follow the Five Principles

Focus is set on five central principles:

Industrial enterprises found captive banks

The motivation to found a bank is complex.

Addressing the right customer groups and offering them the right financial products is extremely relevant for industrial enterprises. As they have the market knowledge including customers expectations and competitors’ products, they are well positioned to understand clients’ financial needs.. Moreover, they are able to anticipate how future developments on the markets possibly influence the product life cycle and their sales.

Bank formation during the financial crisis- factor of success: Carve Out

Greenfield Approach vs. Established Business Model

We see both in the peak of the financial crisis and in its foothills, which can still be felt, the formation of new banks. But it turns out that most of these new bank formations are currently no strategic startups handling a new business segment or a new group of customers, but outsourcing of already existing banks.

Particularly spin-offs in form of previously separated operating divisions or whole business units can be observed. The reasons are often the focus of the strategy of issuing banks due to regulatory requirements. Therefore, the reasons are more exogenously predetermined through the legislation or through requirements in terms of competition law. Nevertheless, it is shown that even these carve outs operate successfully on the market.

Bank foundation with a slim Target Operation Model (TOM)

The global crisis in the banking sector appears to be controllable or in parts already overcome. Now, it becomes apparent that there is again an emerging interest in founding new banks. The reasons are diverse, from a changed strategic direction to the development of new products and services. Bank foundations are primarily carried out by already existing banks.

Boundaries of outsourcing and slimming-down of the TOM

The Restructuring Act came into force

The Restructuring Act of 9 December 2010 was published on 14 December 2010 in the Federal Gazette. Since 1 January 2011 at the latest all regulations of the Restructuring Act are binding. According to the explanatory memorandum of the Act the provisions of the Act shall regulate the proper wind-up of banks. This Act includes for banks which have run into difficulties the possibility to execute a so called controlled procedure (geordnetes Verfahren) (redevelopment proceedings and reorganization proceedings). In this context, the Federal Financial Supervisory Authority achieves the possibility to demand and enforce the necessary steps from a bank to solve their problems at an early stage.

Category: Management of Banks