speech at the ceremony marking the change of office at the regional office in bavaria change of office at the regional office in bavaria 12. 07. 2022 | munich | joachim nagel 1 words of welcome 2 frank - josef benedikt 3 current challenges for banks, banking supervision and regulation 4 rheinhold vollbracht 5 conclusion 1 words of welcome ladies and gentlemen, welcome to this ceremony marking the change of office at the bundesbank ’ s regional office in bavaria. at the end of july, you, mr benedikt, will retire, and mr vollbracht will then take over as president of this regional office. i am very pleased that you have all made it here – healthy or recently recovered. an in - person meeting here in leopoldstrasse is something quite different from seeing each other as a small image on a screen in a video conference, which we regularly experienced last year. in particular, i would like to welcome bavaria ’ s minister of state for finance and home affairs, mr furacker. we very much appreciate your taking the time to join us today. i would also like to extend a warm welcome to dr diederich. you are here as chairman of the executive board of the bavarian banking association. i would like to thank you both in advance for speaking to us and, in particular, to mr benedikt, in a few moments once i ’ ve set out my view of the current challenges facing the banking sector. 2 frank - josef benedikt however, before i begin, i would like to focus our attention on you, mr benedikt. in the space of a few minutes, i am going to try to briefly outline your 36 exceptionally committed and successful years of service to the deutsche bundesbank and also talk a bit about you as a person – quite a challenge. let me start with something that will not have escaped anyone ’ s attention : the music that you, mr benedikt, chose for today ’ s ceremony. i think it tells us something about you. we have heard some very catchy and inspiring jazz music – thanks here go to arvid ’ s jazz company from nuremberg with its leader and trombonist arvid mainz. arvid mainz worked at the bundesbank for 39 years, most recently as the first director of the former branch in nuremberg. you, mr benedikt, held arvid mainz in high esteem as a colleague. you also know

at the same time, we should not kid ourselves that it will all be plain sailing ; some choppy waters lie ahead. owing to the change in monetary policy outlook, the financial markets are now again making a stronger distinction between different risks. as long as there is no proof to the contrary, i assume that these price developments are fundamentally justified. and banks ’ profitability could be impaired by the weaker economic activity and also by the currently high inflation rate, which could lead to credit defaults among households and enterprises. initially, the interest rate reversal could also weigh on some banks. around 40 % of german banks have an elevated interest rate risk, above all smaller banks. this is because they do not hedge their interest rate risk to the same degree as larger institutions. higher interest rates are weighing on the prices of securities ; banks holding securities may therefore have to make writedowns which could, in some cases, have a severe impact on their capital. at present, however, thanks not least to basel iii, banks have enough excess capital ; they should be able to bear such strains. this creates confidence in the banking market and reduces uncertainty, especially during times of crisis. resilience pays off. i am confident that we have learnt the correct lessons from the financial crisis. and over a somewhat longer time horizon, banks will benefit from the interest rate reversal. 4 rheinhold vollbracht few people understand the special challenges facing banks and the important tasks of supervisors as well as you, mr vollbracht. this is because both have played a key role in your professional life. since 2012, you have proven yourself in various managerial positions in this field. the most strategic professional task so far for you came with the establishment of the system of banking supervision in europe, the single supervisory mechanism ( ssm ( single supervisory mechanism ) ), in november 2014. this new structure had to be implemented at the bundesbank. to this end, for organisational purposes, all bundesbank banking supervisors involved in the offsite supervision of significant german credit institutions were assigned to one strategic office. and you took over at the helm. in this role, you have succeeded in putting the supervision of large, significant german banks at our central office on a completely new footing. with a great deal of commitment and care, you united those employees previously assigned to regional divisions throughout germany into new, effective teams. the bundesbank ’ s contribution to ecb ( european central bank ) banking supervision is greatly