Enhance on-site supervision of banks

(1) improving the level of technical expertise and “know-how” among staff; and
(2) increasing the number of supervisory staff in both institutions.

The supervision of IT risks and interest rate risk in the banking book are two areas in
particular where the aforementioned measures have been implemented. IT risks for
institutions, especially the larger banks, have grown in significance given the need for more
granular and specialised information, rise in the number of mergers and acquisitions, and
resultant increase in IT system complexity.

To address these risks, BaFin has established a
new IT section staffed by officers with specific expertise in this area and, in cooperation with
the Bundesbank, developed supervisory guidelines for the supervision of IT risks (especially
IT security). In addition, interest rate risk in the banking book, including the analysis of
institutions’ internal risk management measures and methodologies to calculate the impact of
prescribed interest rate shocks, has now become a key element of on-site inspections.