I am happy to announce that the 5th revised edition of Banking Business in Germany is now available. You can order it at „Fachverlag Moderne Wirtschaft“ (34,50 EUR). It is also available as an E-Book at ciando (28,50 EUR).
Banking Business in Germany, new 5th revised edition
“Banking Business in Germany” is again a joint project of the Association of Foreign Banks in Germany and PwC.
From the Preface, written by Thomas Schäfer, Minister of Finance of the State of Hessen:
Now in its fifth edition, „Banking Business in Germany“ presents the legal and economic frameworks for the banking sector in Germany.
With the European Central Bank and the Bundesbank located here, Frankfurt is a leading location for international monetary and currency policy. And since the Single Supervisory Mechanism (SSM) has been placed under the auspices of the European Central Bank in November 2014, the financial centre of Frankfurt as a whole has become even more valuable and attractive for foreign institutions. And so, together with the European Insurance and Occupational Pensions Authority (EIOPA) and the European Systemic Risk Board (ESRB), Frankfurt is not only the centre of European monetary policy, but has also become a centre for regulatory authorities and supervisory agencies that can boast a competitive regulatory environment.
Over the last few years, the main objective of regulatory efforts at international, European and national level has been the rebuilding of trust in the financial markets. The creation of a Capital Markets Union and the implementation of new European requirements for financial market products are just two of the changes we will have to adapt to. I believe that Frankfurt should contribute towards achieving a change of direction: after years with a focus on regulation, it is now time for the simplification and optimisation of framework conditions. If these challenges can be actively addressed, I am confident that Frankfurt will be able to successfully defend its market position among the competition provided by global financial centres.
We welcome all financial institutions coming to Germany and contributing to this financial market, thereby enabling customers to choose from a diverse range of financial products.
I hope you will enjoy reading this publication and I cordially welcome you to Germany.
The formation of a new development bank is faced with many difficulties particularly in those countries most in need of support from such a state institution. As a result of this, the demand for innovative solutions within this field is constantly growing, especially in emerging markets and developing countries. Solutions enabling these economies to establish a domestic development bank are particularly sought-after. However, the often poor rating poses an unsurmountable difficulty to the bank’s refinancing strategy, thus undermining the states’ abilities to establish a viable bank. Innovative strategies secure favourable refinancing conditions by collateralization for development banks.
The development bank’s rating can be disconnected from the country rating by collateralization using natural resources, more specifically the future cash flows from developed natural resources. Furthermore, by involving a trusted third party, through which cash flows will be redirected, the ownership of natural resources can be retained by the individual governments.
By initially supplying financing for the further development of industry, the domestic development of infrastructure and the state can be indirectly financed. This “circular flow” of funds helps create cash flows which in turn can be used for collateralization and thus secure the favourable provision of refinancing for the newly founded development bank.
Using specific projects, sustainable development structures can be achieved and expanded toward development structures independent of specific project causes. The long-term goal of improved infrastructure and economic growth can be achieved.
-Professionalization of Financial Services-
In order to offer financial services today, companies usually require a banking license and are therefore subject to the supervision of the BaFin. However, there are financial services which can be exempted from the supervision and are therefore not bound to license requirements. These businesses named “Financing Without a Bank” are often ancillary or secondary businesses, which can be offered as a complement to the core business. A possible release of the license requirements depends on the business volume of the respective company.
Generally an increasing intention of non-banks to establish a bank can be observed. This is due to the fact that regulatory requirements are continually intensified and therefore less financial services can be found in the area of a possible release.
However, it should not create the impression that it is easy to implement “Financing Without a Bank”. For this purpose certain core processes should be set up and a suitable risk management should be established in any case.
With regard to risk management it is especially advisable to acquire a banking license because then companies must meet the minimum requirements for risk management (MaRisk). Consequently, they should be able to better assess and control risks.
Additionally, a banking license ensures professionalism in different areas and provides legal security for the conduct of the banking business. Hence, a greater security and loyalty can be gained with regard to the customers.