Risks for German finance revolve around rates, BaFin president says

FRANKFURT (Reuters) -The new president of Germany’s financial watchdog BaFin said on Monday that the greatest risks for the financial sector revolve around interest rates.

BaFin President Mark Branson, just months into the job, also outlined 10 new medium-term goals for the supervisor, ranging from promoting stability to preventing money laundering.

BaFin’s reputation was battered last year after it failed to spot wrongdoing ahead of the collapse last year of the German payments company Wirecard, a former blue-chip hailed as a German success story and once worth $28 billion.

That resulted in new leadership at BaFin with Branson at the top, as well as new powers for the Bonn-based body.

Branson, speaking at a banking conference and in an in-house BaFin publication, said that years of low interest rates can be problematic for certain bank business models and for life insurance.

At the same time, the risk of bubbles forming is increasing in various markets, he said in the in-house publication, BaFin Journal.

“If rates rise abruptly, it will be turbulent,” he said at the conference.

Branson said that banks need to work on improving profitability, which can be the first line of defence in troubled times.

(Reporting by Tom Sims and Frank SiebeltEditing by Riham Alkousaa and Nick Zieminski)