Opinion of the European Central Bank of 2 December 2015 on the legal framework for home savings banks (CON/2015/53)
Date: 2015-12-02
Institutions: European Central Bank
Subjects: Germany, banking supervision, central bank, financial stability, national law, savings bank

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 2 December 2015 

on the legal framework for home savings banks 

(CON/2015/53) 

Introduction and legal basis 

On  1  November  2015  the  European  Central  Bank  (ECB)  received  a  request  from  the  German  Federal 
Ministry of Finance for an opinion on a draft law amending the German Bausparkassen Act1 (hereinafter 

the ‘draft law’).  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning  of  the  European  Union  and  Article 2(1)  of  Council  Decision  98/415/EC 2  as  the  draft  law 

contains draft legislative provisions within the ECB’s field of competence pursuant to Article 127(6) of the 

Treaty  and  rules  applicable  to  financial  institutions  insofar  as  they  materially  influence  the  stability  of 

financial  institutions  and  markets.  In  accordance  with  the  first  sentence  of  Article 17.5  of  the  Rules  of 

Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

1. 

Main purpose of the draft law 

1.1  Taking account of the challenges created by the current environment of low interest rates, the draft 

law  introduces  provisions  aimed  at  securing  and  strengthening  the  manner  in  which  profits  are 

generated by Bausparkassen according to the German Bausparkassen Act (for the purposes of the 

present opinion referred to as home savings banks) and proposes measures to strengthen the risk 

management  of  home  savings  banks.  The  main  purposes  of  the  draft  law  are  to:  (a)  amend  the 

Bausparkassen  Act  so  that  it  allocates  supervisory  competences  to  the  ECB  and  the  Federal 

Financial Supervisory Authority (BaFin) pursuant to Council Regulation (EU) No 1024/2013; and (b) 

ensure that the typical risks that home savings banks face while conducting their business activities 

are managed by the home savings banks themselves and not by other units of the banking group 

within which home savings banks are often included.  

1.2  The  draft  law  specifies  the  requirements  that  home  savings  banks  must  fulfil  when  carrying  out 

their  business  activities.  In  particular,  Tier  1  capital  needs  to  amount  to  at  least  EUR  20  million. 

Furthermore, suitable regulations and instruments to manage, monitor and control the specific risks 

that home savings banks face in their business activities must be implemented and a business plan 

1  

2  

Bausparkassen  Act  (‘Gesetz  über  Bausparkassen’)  of  15  February  1991  (BGBl.  I  p.  454),  as  amended  by 
Article 6(14) of the Law of 28 August 2013 (BGBl. I p. 3395). 
Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

 
 
 
 
                                                 
ECB-PUBLIC 

must  be  presented  to  BaFin  that  sets  out  the  manner  in  which  these  business  activities  will  be 
carried out on a regular and sustainable basis 3.  

1.3  The draft law introduces a requirement that, in the event of a home savings bank’s banking license 

expiring or being withdrawn by the competent authority, all building loan agreements, including all 

related assets and liabilities, must be transferred to another home savings bank. If the bank does 
not comply with this requirement, BaFin may order the business to be wound up4. 

1.4  The draft law reinforces the principle that a home savings bank may not be managed by any other 

type  of  entity  by  stipulating  that  any  contract  or  agreement  that  places  a  home  savings  bank’s 

management under the control of a different entity is  invalid, unless this entity  is recognised as  a 
home savings bank 5. 

1.5  The draft law introduces a requirement to put in place a specific and independent risk management 

system, significant elements of which – in particular collective management and the management 
of risks related to the collective home savings business - may not be transferred to third parties 6.  

1.6  The draft law  extends the  possibility  of home savings banks to grant  ‘other building loans’. Other 

building loans are granted in order to finance housing expenditures without being linked to a home 

savings contract. The draft law,  on the one  hand, increases the total limit on other building loans 
from  75%  to  100%  of  home  savings  loans  and  loans  for  pre-  and  interim  financing7,  and,  on  the 

other  hand,  allows  home  savings  banks  to  use  the  funds  from  home  savings  deposits  that  are 

temporarily  not  being  used  to  grant  home  saving  loans  for  the  purpose  of  granting  other  building 
loans8. 

1.7  The  current  Law  on  home  savings  banks  does  not  allow  home  savings  banks  to  issue  covered 
bonds. Subject to the conditions set out in the Law on covered bonds 9, the draft law grants home 

savings banks the possibility to issue covered bonds in order to grant home saving loans and other 
building loans and to raise funds required by it to carry out its business activities 10. 

1.8  The draft law provides that the special items fund in the form of a technical reserve may be used to 

secure  the  collective  caused  interest  margin,  and  if  necessary  to  guard  against  any  specific  risk 

that the business activities might not be sustainable  as they are carried out by  the  home savings 
banks.11 

3  
4  
5  
6  

7  
8  

9  

10  

11  

Section 2 of the draft Bausparkassen Act. 
Section 2(5) and (6) of the draft Bausparkassen Act. 

Section 2a of the draft Bausparkassen Act. 
Section 8(1) and (2) of the draft Bausparkassen Act. 

Section 4(2) of the draft Bausparkassen Act. 
Section 6(1) No (2) of the draft Bausparkassen Act. 

Law on covered bonds (‘Pfandbriefgesetz’) of 22 May 2005 (BGBl. I p. 1373), as amended by Article 5 of the Law of 
2 November 2015 (BGBl. I p. 1864). 
Section 4(1) of the draft Bausparkassen Act. 

Section 6(2) No 2 of the draft Bausparkassen Act. 

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2. 

General observations 

The draft law provides home savings banks with more flexibility to operate profitably, in particular 

by allowing them to issue covered bonds.  

3. 

Specific observations 

3.1  Special provisions on risk management 

The  ECB  acknowledges  that  the  draft  law  aims  at  strengthening  the  risk  management  of  home 

savings banks. In view of establishing a level playing field, however, outsourcing (parts) of the risk 

management  should  not  be  restricted  by  special  provisions  for  home  savings  banks  as  provided 

under  the  draft  law.  The  existing  legal  framework  transposing  Directive  2013/36/EU  of  the 
European  Parliament  and  of  the  Council12  already  requires  that  the  risks  stemming  from 

outsourcing are mitigated by a proper risk strategy, processes and controls. Moreover, the current 

legal framework already requires that the risk management of any credit institution including home 

savings banks needs to be adequate for the credit institution’s specific type of business, risk profile 
and complexity.13 

3.2  Allocation of competences 

3.2.1  Member  States  may  issue  legislation  that  specifically  addresses  the  business  model  of  home 

savings  banks.  Such  legislation  has  to  comply  with  Union  law,  in  particular  Directive  2013/36/EU 
and Directive 2014/59/EU of the European Parliament and the Council 14. However, where national 

legislation  creates  competences  that  are  directly  related  to  competences  conferred  on  the  ECB, 

such competences established by national legislation should be applied by the ECB, provided that 

the relevant provisions can be construed as implementing Union legislation.  

3.2.2  In particular, noting that the ECB has the exclusive competence to grant authorisations within the 
Single Supervisory Mechanism, the ECB understands that it will receive the business plan  15 when 
going through the procedure to obtain an authorisation 16. 

3.2.3  Similarly,  where  the  draft  law  includes  a  requirement  that  home  savings  banks  must  submit  a 
collective status report annually to BaFin17, the ECB notes that the respective information is subject 
to the general obligation to submit information to the ECB 18. It contains data, for example, on the 

banks’ capacity to meet liabilities, the amount of their assets and other data relevant to assess their 

12  

13  
14  

15  
16  
17  
18  

institutions  and 

the  prudential  supervision  of  credit 

Directive  2013/36/EU  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  access  to  the  activity  of 
credit 
firms,  amending 
Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). 
Section 25b of the German Banking Act (‘Kreditwesengesetz’). 
Directive 2014/59/EU of the European Parliament and of the Council of 15 May  2014 establishing a framework for 
the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, 
and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU,  and 
2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU)  No  648/2012,  of  the  European  Parliament  and  of  the 
Council (OJ L 173, 12.6.2014, p. 190). 

institutions  and 

investment 

Section 2(1) No 5 of the draft Bausparkassen Act. 
Article 14(1) SSM Regulation. 
Section 4(5) of the draft Bausparkassen Act. 

Article 6(2) SSM Regulation, Article 21 SSM Framework Regulation. 

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financial  situation  and  stability19,  and  such  data  is  essential  for  the  ECB  to  be  able  to  carry  out 

supervision in accordance with the tasks conferred on it by Council Regulation (EU) 1024/2013.  

ECB-PUBLIC 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 2 December 2015. 

[signed] 

The President of the ECB 

Mario DRAGHI 

19  

Section 3(5) of the draft Bausparkassen Act. 

4