The recent turbulence has raised questions as to whether many banks, especially the Landesbanken, have viable business models, an IMF survey says. Reverberations from the financial crisis have started to change the country's financial sector. It notes that the current policy of consolidating the banking sector mainly from within the public pillar of the three-pillar banking system - comprising the private, cooperative, and public pillars - risks creating regional banks that may not withstand intensifying global financial sector competition.
The survey also recommends that more could be done and consolidation of bank supervision and prudential enforcement. Regulation will need to stay with BaFin to maintain its role as a consolidated supervisory agency and, under any supervisory arrangement, the Bundesbank would need all necessary information to fulfill its financial stability and lender-of-last-resort responsibilities.
Survey
Annual assessment on Germany
© Graham Bishop
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