Category: Practical Experience

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Establishment of banks: an option for corporations? – Part 2

As explained in the preceding post regarding the recent PwC-Whitepaper “Establishment of banks: an option for corporations?”, the establishment of corporate-owned banks is not a strategic option for the german industrial sector even though the automotive industry is using them with great success.

These results contrast with the high demand for individualized financial services. Every other surveyed corporation wishes for increased efficiency and professionalization of financing activities within the firm. Beyond that working capital-management (36%), securing sales (34%), securing the supply-chain (27%) and diversification of business activities (27%) were central needs.

Establishment of banks: an option for corporations? – Part 1

It’s hard to imagine an automotive industry without corporate-owned financial institutions. Sector expertise concerning customer data, residual values and distribution channels allow for lending and leasing as well as the offering of appropriate insurance-models at attractive terms. In addition to these products the corporate-owned banks also offer classic banking products such as day-to-day money or credit cards. Thus they do not only optimize corporate financial activity but also enhance customer loyalty. Are corporate-owned banks therefore the next logical step towards an evolved industrial business model and can increased establishment be expected in the future?

Swiss banks: New chances for market entry in Germany by means of a simplified regulatory framework

FINMA and BaFIN finally came to an agreement regarding all the required concrete measures for the so called “Simplified Exemption Procedure”. Thereby the regulatory framework for the market entry of Swiss banks in Germany will be facilitated.

 

In the past, Swiss banks going for a business activity in Germany without establishing a physical presence were required to meet several conditions which made conducting business operations more complicated. In particular, Swiss banks had to involve a locally active German / EEA bank for the customer identification of private clients.

New 5th edition of Banking Business in Germany is due for 2016

As time goes by …

Although it seems to me as if the 4th edition of Banking Business in Germany was finalised only yesterday: The regulatory pace is still high and changes the framework of the financial services market day by day. So the authors from Association of Foreign Banks in Germany (Verband der Auslandsbanken in Deutschland e.V.) and PwC will convene once more over the next months in order to implement the latest developments into a new 5th edition of this practical guide for foreign banks establishing a subsidiary or a branch in Germany.

Calculation of the contributions to the German deposit guarantee scheme – Overview and preview of the new contributions regulation

When establishing or acquiring a bank in Germany, a regulatory business plan must be provided to the German Federal Financial Supervisory Authority which contains, amongst other things, the expected costs. These costs include the mandatory contribution payments to the German deposit guarantee scheme Entschädigungseinrichtung deutscher Banken GmbH (EdB).

SSM licensing procedure – first impressions

On November 4, 2014, the Single Supervisory Mechanism (SSM) became effective. It entrusts the European Central Bank (ECB) with the final approval of a credit institutions licence application. Here some first impressions from one of the SSM licensing procedures currently on the way:

Theory and practice of an SSM licensing procedure

While the corresponding EU-provisions describe ECB’s involvement in an SSM licensing procedure as having 10 (20) working days for its final approval once the national application procedure came to a positive preliminary result, the practice is rather different. In reality, ECB will be involved in an SSM licensing procedure from the first day the applicant approaches the national competent authority (the national regulator). Thereafter, ECB and the national regulator will liaise closely. The national regulator will remain the first point of contact for the applicant in the daily operations of the licensing procedure. However, ECB will join the meetings with the applicant once the application is filed.

Our new Brochure about the regulatory market entry to Germany – This is how you can clear the regulatory hurdles to starting up your banking business

The desire to operate a bank (deposit-taking credit institution) is one of those projects that should be prepared carefully well in advance. In Germany, the banking sector is subject to comprehensive and stringent regulations – which is why it is important to have in-depth knowledge of these regulations and include them in the planning. In Germany, in general there are four possible approaches for the market entry in the banking sector. Your company can establish or acquire a bank or, by using the European Passport, set up a branch or provide cross border services.

The new European Single Supervisory Mechanism (SSM)

The introduction of the Single Banking Supervisory Mechanism (SSM) led to a substantial shift of supervisory functions from BaFin to ECB. Since November 4th 2014, ECB is not only the competent authority for the final decision within licensing procedures of deposit-taking credit institutions, the assessment of intended acquisitions or disposals of significant holdings in deposit-taking credit institutions but also amongst other things for supervising significant deposit-taking credit institutions. Thus, the new SSM is a first significant step towards unified supervisory practices in the European Union.

Regarding this topic, see also our article from April 9th 2015.

Banking Business in Germany, 4th edition – now available

We did it again: The 4th revised edition of “Banking Business in Germany” is now available.

banking-business-in-germany-auflage-4-cover

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.

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”

True. But actually the book covers much more: It presents a current overview of the economic, regulatory, legal and tax framework that applies to credit institutions and financial service institutions in Germany.

License procedure of AIFM under KAGB: Experience from the first months

Nearly half a year went by since the Kapitalanlagengesetzbuch (German Investment Act; “KAGB”) entered into force in July 2013.  Time for a first resume of the issues which crystallised in the due course of the license procedures for Alternative Investment Fund Managers (“AIFM”) since then.

Capital requirements and regulator’s usance in this area

While most of the draft applications complied with the general capital requirements pursuant to section 25 KAGB, it was sometimes necessary to remind of existing regulator’s usance in order to avoid otherwise predictable feedback by the regulator on this issue.  Occasionally applicants omitted that the volumes requested by section 25 par. 1 and 4 KAGB are minimum requirements, which can be missed, especially in case of starting losses.