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Germany’s financial regulator BaFin is set to have to cut its ties to banking lobbyists and ensure it does not take orders from the finance ministry under rules being proposed by Brussels in the wake of the Wirecard scandal.
The draft legislation would stop bank supervisors across the EU “seeking or taking instructions” or being influenced by any external body, including companies they regulate or government agencies. It will also tighten up rules on regulatory staff trading in the shares of supervised companies. “Recent developments such as the Wirecard scandal showed the need for clearer and more operational provisions on the principle of the independence of supervisors.
This is included in our proposal,” said a commission official. The provisions are being scrutinised in Germany. BaFin was heavily criticised for its handling of the scandal involving Wirecard, the payments group that collapsed in 2020 after revealing a multiyear fraud. A report by the European Securities and Markets Authority last year raised questions about BaFin’s independence from political interference, pointing to the fact that the regulator was closely updating the finance ministry about its work “in some cases before actions were taken”.
The report also flagged trading in Wirecard shares by some of BaFin’s team members as “concerning”. The measures now suggested by Brussels are part of banking legislation proposed by the European Commission to strengthen financial supervision across the EU. Sebastian Mack, Policy Fellow for European Financial Markets at the Jacques Delors Centre in Berlin, said the provisions, which are part of a broader regulatory package, “would massively strengthen the operational independence of BaFin and other national supervisors”...
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