Germany’s financial regulator is concerned about IT problems at the state-backed development bank KfW and is considering demanding higher capital reserves to compensate, Handelsblatt has learned.
A spokesperson for the German Finance Ministry confirmed to Handelsblatt that demands for more capital are likely after the regulator BaFin found issues with the bank’s IT systems during tests run in 2016. “Until they are dealt with, these discoveries can lead to temporary additional capital requirements from BaFin to KfW,” the spokesperson said.
Since 2016, the state-owned bank has been treated by BaFin like any other private bank for regulatory purposes. KfW is Germany’s third-largest bank with about €503 billion on its balance sheet.
Still, the spokesperson said the finance ministry doesn’t expect that KfW will need an additional injection of capital from the government. Instead, the government is pushing to allow €4.65 billion in special assets already assigned to the KfW to be counted towards its hard capital reserves. The economics ministry is pushing for legal changes in Germany’s parliament to make that clear.
BaFin and KfW would not comment to Handelsblatt.
Read the full story in Monday’s Handelsblatt Global. http://hbge.net/hv7tl