Germany’s BaFin publishes revised MaRisk circular

The German Federal Financial Supervisory Authority, BaFin, has updated its circular on minimum requirements for risk management, known as MaRisk.

The revised version of MaRisk came into force on June 29, 2023, with a transitional implementation period for new requirements that have been introduced with the respective amendments.

MaRisk outlines BaFin’s requirements for German credit institutions and German investment firms in terms of risk management, taking into consideration the principle of proportionality. The revised version of MaRisk includes several amendments relating to specific requirements around working from home for traders, the institutions’ real estate business, the definition of risk culture, and the integration of environmental, social, and governance (ESG) risks. The revised MaRisk also implements the European Banking Authority (EBA) guidelines on loan origination and monitoring (EBA/GL/2020/06).

The amendments include the following:

• The implementation of the guidelines EBA/GL/2020/06. The amendments concern, for example, the processes in the lending business (MaRisk BTO 1.2) and the risk management models of the institutions (MaRisk AT 4.3.5).
• The implementation of requirements on how banks’ risk management concerns their own real estate business (MaRisk BTO 3).
• The implementation of the facilitations for securities trading whilst working from home. These were originally enacted due to the Covid-19 pandemic, but will continue to apply as long as no deviating standards apply internationally (MaRisk BTO 2.2.1).
• Clarifications on the topic of sustainability and ESG risks. Specifically, the MaRisk clarifies that institutions should measure their sustainability risks based on scientifically based (forward-looking) scenarios (MaRisk AT 2.2 and AT 4.1). It also includes guidance on how to describe sustainability risks in the yearly risk report (MaRisk BT 3.1).
• Clarifications in relation to risk culture of an investment firm, specifically the establishment of procedures to monitor staff compliance with the risk culture (e.g. through self-surveys by staff) (MaRisk AT 3).

The revised MaRisk contain clarifications that describe the current administrative practice of BaFin in detail. Such requirements are to be applied immediately after publication from June 29, 2023. There is a transitional period until January 1, 2024 for the implementation of the new requirements.

At Zeidler Group, we can help you in understanding the revised MaRisk circular. Our global team of professionals remains up to date on the latest legal, regulatory and compliance changes affecting the asset management industry.