BaFin and the Bundesbank should continue to strengthen their supervisory practices
• BaFin and the Bundesbank should continue to strengthen their supervisory practices
to ensure the early and comprehensive identification of risks within each institution.
This includes inter alia enhancing business model and risk culture analysis; ensuring
that supervisors are aware of major acquisitions by supervised banks and are able to
take necessary actions at an early stage in response to their impact on banks’ risk
profile; increasing credit risk expertise to enhance the oversight of non-IRB aspects of
credit risk; incorporating liquidity risk scenarios in their stress testing framework; and
increasing the number and scope of on-site inspections for insurance companies.
• To enhance the timeliness, consistency and effectiveness of supervisory interventions,
BaFin should expand the use of forward-looking elements and of objective
quantitative and qualitative triggers in the banking supervision “ladder of actions”;
and introduce a separate “ladder of actions” for insurance supervision.