DrAn accounting scandal involving the former payment service provider Wirecard is now affecting the cooperation between the Federal Ministry of Finance and the Federal Financial Supervisory Authority (Bafin). Accordingly, the Department wants to respect Baffin’s operational independence in exercising its legal and technical oversight. In the future, moderators should only report in larger cases. These include significant developments in major companies, effects on financial market stability or serious harm to investors and consumers.
Only then does the ministry want to be informed. This enables the Ministry to perform its legal oversight functions. At the same time, Bafin’s personal responsibility for individual supervision is maintained. Since August, the supervisory authority is headed by Mark Branson, who came from the Swiss financial organization FINMA. The new Finance Minister is Christian Lindner. The Wirecard scandal had no consequences for his predecessor, Olaf Schultz, who is now the chancellor.
On the other hand, former Baffin boss Felix Hoffield was forced to resign in January 2021 due to the scandal surrounding stock deals by Baffin’s employees and the controversial short-selling ban on Wirecard stock with the concurrent criminal complaint against journalists who relayed criticism from the Financial Times. Baffin’s situation in a serious credibility crisis has fallen. Branson, a Briton with Swiss citizenship, has to essentially renew power.
The relationship with the Ministry of Finance, which has legal and technical supervision over Bafin, is of crucial importance for this purpose. In February 2019, the German Bundestag’s Wirecard Investigative Committee critically questioned the Finance Ministry’s role in the controversial ban on short selling of shares in the then Dax. Because Baffin’s scale gave the impression that the supervisor had to protect Wirecard from unscrupulous speculators.
More bold action by supervisors
After the Wirecard scandal, Bafin was given additional powers, including to review the balance sheet, which is currently the focus of the Adler real estate scandal. Baffin’s new boss, Branson, likes the long chain that Chancellor Lindner allows to use his power. After all, working in PR is now Pavin’s responsibility alone. The department will not approve of Brunson’s media interviews.
“As financial regulators, we need to be able to act with boldness, clarity, speed and responsibility,” Branson said. “As a public authority, we are clearly responsible.” In his view, the Simplified Principles establish a modern and risk-oriented framework.