The head of the financial supervisory authority expects interest rate increases in the near future.
(Photo: Jann Höfer for Handelsblatt)
Frankfurt The financial regulator Bafin warns of the further consequences of the Ukraine war for the German banking industry. The financial system is stable and the direct effects of the war and the sanctions against Russia and Belarus are now manageable, said the head of the Federal Financial Supervisory Authority (Bafin), Mark Branson, on Tuesday at the annual press conference. “The second and third round effects, which are difficult to assess, could become problematic,” he emphasized.
The war slows down economic growth worldwide, disrupts trade relations, drives up the prices of gas, oil and other raw materials and exacerbates the problem of supply shortages. An economic downturn and rising unemployment could be the consequences.
They also register that inflation is rising due to higher energy prices, “which makes interest rate hikes more and more likely, also in the euro zone,” said Branson. “An abrupt and sharp rise in interest rates could get banks into trouble,” he noted.
Short-term refinancing suddenly became more expensive, while interest income rose more slowly due to longer fixed interest rates. The Bafin is currently examining which German banks would be particularly challenged in this scenario.
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Against the background of the war, financial supervision is also keeping an eye on cyber risks. “The danger that companies in the financial sector will fall victim to cyber attacks or that there will be internal IT security incidents is very large and very present,” said Branson.
Branson warns of hacker attacks
The war made cyber attacks on the German financial sector more likely. “In extreme cases, such incidents can damage the stability of the financial system,” explained the Bafin boss. Experts have been warning for some time that hacker attacks from Russia could increase as a result of the war and the sanctions.
Branson, who previously led the Swiss financial regulator Finma, took over the management of Bafin in August last year from Felix Hufeld, who had to vacate his post in the wake of the Wirecard scandal. In the case of Wirecard, neither the Bafin nor the auditors of EY had noticed the alleged billion-dollar fraud of the now insolvent payment service provider, which had been going on for years.
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