Funding required for running the business
As already posted on June 2012 (see below), from July 2013 on all collective investment schemes, which are not already covered by the UCITS Directive [Directive for the regulation of collective investment undertakings; Directive 2009/65/EC] are regulated by the AIFMD. Therefore fund managers of so-called “alternative” funds, such as private equity funds or hedge funds generally are required to obtain a license for their activities.
There are numerous requirements that have to be met in order to obtain an AIFM-license by the Federal Financial Supervisory Authority (BaFin). One of these conditions is the availability of adequate capital.
In the near future, collective investment models that do not fall under the UCITS Directive, will be regulated indirectly by the AIFMD. The AIFMD regulates fund managers directly, and thus indirectly also their products, and will be applied from 22 July 2013. In the future, it will apply basically to so-called “alternative” fund managers, such as managers of closed end funds, private equity or non-UCITS investment funds, and on account of European provisions a license will be required.
The German implementation is currently in preparation. According to reports, the current investment law is turned upside down and will be transformed in a so called “Capital Investment Code”. The release of the draft is expected daily.
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"
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.
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.
Time is relative. But from a regulatory perspective the last four years since 2007 brought close to epochal changes. In nearly all areas of the financial industry the measures taken to scope with the financial crisis led to fundamental amendments and new regulations which already transformed the industry sustainably and will further do so in future.
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.
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 choice of the organizational structure for bank formation is a central task to ensure the future competitiveness of the financial institution in a highly dynamic and complex, competitive environment. The organizational form has to take efficiency and security aspects sufficiently into account. It allows the operative implementation of the corporate strategy. In addition to the efficiency criteria, there are also the regulatory framework conditions, such as the separation of functions according to the minimum requirements on risk management (MaRisk), to be implemented in the organizational structure of banks.