Germany’s Bundesanstalt für
Finanzdienstleistungsaufsicht (BaFin) is the supervisory authority
for leasing companies. BaFin has recently further refined and
extended its minimum requirements for risk management for banks and
financial services institutions (Mindestanforderungen an das
Risikomanagement – MaRisk).
MaRisk introduces tougher and more wide-ranging supervisory
requirements with regard to stress testing, liquidity risk and risk
concentration. All institutions will be obliged to stress test
their material risks based on identified risk factors. The stress
tests must have particular regard to concentrations of risk. Banks
will also have to manage and monitor their liquidity risks in such
a way that impending shortages of liquidity are recognised early.
There must be appropriate risk management strategies for the risk
of losses resulting from risk concentrations.
BaFin also tightened the requirements for
group-wide risk management. Institutions will no longer be able
simply to demonstrate they have sufficient risk-bearing capacity at
the level of each individual company, but will be obliged to
demonstrate this for the whole group.
In addition, BaFin is now giving greater
weight to the interaction between management and the supervisory
board. In future, the executive management will be required to
grant the supervisory board a right to request information directly
from the internal audit department, so as to enable the supervisory
board to better exercise its supervision and monitoring
The new MaRisk also contain more explicit
requirements for banks’ remuneration systems. Aggressive
remuneration systems contributed to the financial crisis by
creating skewed incentives. Short-term profits may no longer play
any role in the variable compensation of management or staff who
are involved in high-risk positions. Institutions will have to
ensure the variable compensation is based on the profitability of
their unit and the institution.
Banks and financial services institutions are
required to implement the new MaRisk by 31 December. Implementation
represents a major challenge and it is vital lessors have access to
expert advice on the practical implications.
Aside from supervisory legislation, another
hot topic is funding opportunities. KfW Bankengruppe is one of the
largest capital market issuers in Europe after the governments of
Germany, France, the UK and Italy. KfW Mittelstandsbank brings
together all of KfW’s funding offers for business start-ups and
SMEs, and has recently launched a special programme that
additionally appeals to independent lessors of all sizes.
Leasing companies may apply for working
capital to finance new leasing operations but follow-up financings
are not permitted. There is a maximum of €50 million per project
and the maximum loan amount is €200 million for lessors.
The author is an associate at
The Alta Group and a former sales manager EMEA for CIT