Financial conglomerate (large and complex financial institution)
A company which, alone or as part of a group – and in this case a group sometimes consists of more than a thousand legally independent subsidiaries – offers a full range of financial services, i.e., in addition to banking services and stock exchange transactions, above all insurance. – More detailed characteristics are that these companies – offer a wide range of financial products and services, – take on significant off-balance-sheet risks, – report to several supervisory authorities, and – occupy a prominent position in the payment and settlement systems. A broad definition of the term can be found in Section 1, Paragraph 20 of the German Banking Act (KWG). – The global trend toward conglomerates from about 1990 onward led to a merger of the supervisory authorities that had previously been established for individual lines of business (insurance companies, banks, stock exchanges). Supervisory regulations subjected financial conglomerates to closer scrutiny in many countries – and in Germany in particular. Nevertheless, there were still supervisory gaps; these were ultimately closed only as of 2014 with the establishment of European banking supervision. – See bank, systemic, bankassurance, holding company, Federal Financial Supervisory Authority, complex group, Financial Services Authority, financial holding company, holding company, gigabank, Joint Forum on Financial Conglomerates, control, corporate group, mixed group, mixed technical group, ultimate parent company. – Cf. ECB Annual Report 2001, p. 155, ECB Monthly Bulletin of August 2002, p. 59 f., BaFin’s Annual Report 2002, p. 44, BaFin’s Annual Report 2003, p. 26, Deutsche Bundesbank’s Monthly Report of April 2005, p. 39 et seq. (supervisory issues; p. 49: more precise definition of the term “financial conglomerate”), ECB’s Monthly Report of May 2005, p. 89 (risk diversification in conglomerates), BaFin’s Annual Report 2004, pp. 63 et seq. (EU Financial Conglomerates Directive and its implementation in German law; coordinator principle for companies operating in several countries), BaFin Annual Report 2005, p. 78 (entry into force of the Financial Conglomerates Solvency Regulation in September 2005), BaFin Annual Report 2006, p. 35 (efforts to ensure uniform and complete application of the Financial Conglomerates Directive), BaFin Annual Report 2008, p. 72 f. (Financial Conglomerates Solvency Regulation), BaFin Annual Report 2009, p. 43 f. (revision of the Financial Conglomerates Directive), BaFin Annual Report 2011, p. 83 ff. (important innovations), BaFin Annual Report 2012, p. 67 f. (comprehensive revision of the EU Commission’s Financial Conglomerates Directive; details), BaFin Annual Report 2013, p. 32 ff. (the Financial Conglomerates Supervision Act came into force as an implementation of the EU Directive), and the respective BaFin Annual Report, chapter “International.”
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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