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    BaFin Updates Guidance on Ringfencing and Resolution Planning by Banks

    August 06, 2020

    BaFin published the updated interpretative guidance on Article 2 of the German Act on ring-fencing and recovery and resolution planning for credit institutions and financial groups—also known as the Bank Separation Act. The guidance has been updated in light of the additional questions that have been raised on implementation of the Bank Separation Act and on application of the interpretative guidance. The issues addressed in the updated version of the interpretative guidance essentially cover the scope of the Bank Separation Act, the determination of thresholds for the subjective scope of application, the scope of the risk analysis, prohibitions and provisions on exemptions from prohibitions, and regulatory provisions for financial trading institutions. BaFin also published a comparative version of the guidance to illustrate the changes made.

    The interpretative guidance, which has been jointly developed by BaFin and Deutsche Bundesbank, is designed to help institutions falling under the scope of application of the Bank Separation Act on how to adjust their previously conducted risk analyses in the subsequent compliance process. The interpretative guidance is also intended to assist law enforcement agencies in terms of their legal assessment of matters covered by the Bank Separation Act. To ensure that all institutions have the same information at their disposal, BaFin has now decided to make the interpretative guidance publicly available in the form of general questions and answers. In addition, the interpretative guidance has been divided into modules to make it more user-friendly and to enable BaFin to make subsequent amendments more easily, if required. The updated version replaces the previous version of the interpretative guidance, which was published on December 14, 2016. BaFin will amend this interpretative guidance, if necessary, particularly if the legal framework or supervisory standards change or if such amendments are required due to findings in supervisory practice.


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    Keywords: Europe, Germany, Banking, Recovery and Resolution, CRR, Ring Fencing, Bank Separation Act, Resolution Framework, Basel, BaFin

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