Banking Act


In which Banking Act (KWG) is a German law whose purpose is the market regulation and market regulation of the credit system.

The Banking Act applies to financial services institutions and credit institutions (see § 1 para. 1 S. 1, para. 1a S.1, para. 1b).

The main purpose of the credit institution is:

- the preservation and safeguarding of the functioning capacity of the credit economy
- the protection of creditors' credit institutions against loss of deposits

In particular, this is shown in § 6 KWG, which regulates the tasks of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht). In accordance with § 6 Abs. 1, BaFin therefore has to exercise the so-called institutional supervision, ie the supervision of the financial services and credit institutions, and on the other hand to ensure the proper conduct of banking transactions or financial services within the framework of general maladministration in financial services and credit and thus prevent the occurrence of significant disadvantages for the whole economy.
However, this type of supervision is not intended to protect the individual consumer or creditor, but serves the protection of all creditors in their publicity and the public confidence in the ability of financial services and credit institutions to function. The Banking Act was adopted as a response to the banking crisis of 1934 in Germany and entered into force one year later in its first form.

The Banking Act and supplementary regulations impose restrictive restrictions on credit institutions, which limit the possibility for banks to take certain risks. These rules can be categorized on the basis of the limited risk type:

The default risk:
- § 10 KWG; Addressing the risks of counterparty default with own funds (Solvency Regulation)
- §§ 13, 14 KWG; Large loans and million-dollar loans

The market risk:
- § 10 KWG; Underlying Market Price Risks with Own Funds (Solvency Regulation)

Liquidity risk:
- § 11 KWG (specified by the Liquidity Regulation)

Operational risk:
- § 10 KWG; Operational risks through own funds (Solvency Regulation)
- § 13 para. 2 KWG; large exposure
-§§ 15, 17 KWG; organ credit
-§ 18 KWG; Examination of economic conditions
-§ 25a KWG; organizational obligations (anti-money laundering, §§ 25b to 25i KWG)
-MaRisk as the concretization of § 25a KWG
-§ 32 para. 1 KWG; permission

Information Risk:
- § 23 KWG; advertising ban
- §23 a KWG; deposit guarantee
-§§ 39, 40 KWG; Designations Sparkasse, Bank, Bankier, Volksbank


The Banking Act provides the legal basis by which the Bundesbank and BaFin can receive information from banks and have direct influence on the credit institutions.
Under the Liability Act, the reporting obligations of the supervised institutes are derived:

The general obligation to provide information:
- § 44 KWG
Information and audits of institutions: Banks have a general obligation to provide information on all business matters, even without a special occasion.

Information on solvency
- § 10 KWG in conjunction with the Solvency Ordinance: This passage concerns the appropriate allocation of the own funds of all credit institutions. A monthly total code is created. It is also necessary to review and approve bank models.

Information on liquidity

§ 11 KWG in conjunction with the liquidity regulation: the liquidity position of the credit institutions is represented by the preparation of a monthly liquidity figure.

large exposures

- §§ 13, 13a, 13b KWG: Large lending: Banks are required to report their large loans every quarter. The reporting time for a large credit ceiling can only be exceeded with the consent of BaFin. The amount that exceeds the large credit ceiling must be subject to additional own funds. Further regulations on large-scale lending are regulated in the Gross- und Millionenkreditverordnung (GroMiKV).

Monthly and annual accounts

- § 25 KWG: The monthly balance sheet statistics (monthly payments) to the Deutsche Bundesbank are to be exercised by BaFin.

- § 26 KWG: Presentation of financial statements, audit reports and management reports

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