Can you briefly explain what the remit of your association is and give us a glimpse of your work?
The Association of German Banks represents the interests of the private banks in Germany. These include major, international banks but also smaller regional and foreign banks. As of today, we have 177 member institutions and around 180 employees in Berlin, Frankfurt and Brussels.
Among other things we are in contact with regulators, promote financial education and take care of deposit protection. I lead the team that covers prudential regulation, banking supervision and accounting. On the one hand, we represent our members’ interests in discussions with both the legislative bodies in Brussels and supervisory authorities such as the EBA, the ECB and national authorities. The other way around, we inform our member institutions about upcoming regulation and supervisory activities. We support them in understanding and interpreting the constantly emerging rules and guidelines.
You will join our panel discussion on Basel III and capital requirements. Why is this a topical issue?
EU banks will have to apply the new rules from the beginning of next year. So, banks’ internal implementation projects are running at full speed now.
Moreover, we are currently seeing that the individual jurisdictions are implementing the rules quite differently – both in terms of time tables and contents.
This goes against the original intention and gives this topic a strong political dimension. Apparently, the revised standards have turned out to be not fit for purpose.
Why is that? What are the main reasons for the banking industry and policymakers around the globe being so critical of this reform?
It marks a crucial turning point in the way banks are regulated.
As of now, capital requirements are predominantly risk-based: The more risk a bank takes on, the more capital it has to hold.
Now, the reform is breaking this nexus between risk and capital requirements. To put it bluntly, banks’ activities are being lumped together and capital requirements are more standardised. In return, the overall level of capital requirements is being increased.
So, first and foremost, the reform will limit banks’ overall lending capacities. But it will also influence their internal allocation of capital costs. Consequently, it has implications on both their risk management and their business strategies.
What do you expect from the panel discussion and why should people make sure not to miss it?
The industry and the supervisory community have not been entirely on the same wavelength in the assessment of Basel III. So, I am sure we are going to have a very lively debate!
On top of that, the audience will learn about the main challenges that Basel III poses in practice and get an idea how to tackle them.
In general, what are you looking forward to the most with regard to the upcoming Risk Live Berlin event?
It is obviously a great achievement that we are nowadays able to do a large part of our work online. However, I think it is good to meet in person from time to time. That is why I am excited to finally meet some long-time companions in person again and make new acquaintances here on our doorstep in Berlin on 1 October.
