Germany poaches head of Swiss regulator to lead BaFin

Mark Branson, head of the Swiss finance watchdog Finma, is set to become president of BaFin as the German regulator looks to rebuild its reputation after the Wirecard scandal.

BaFin’s previous boss Felix Hufeld and his deputy Elisabeth Roegele were ousted in January over their handling of the worst accounting fraud in Germany’s postwar history.

Olaf Scholz, the German finance minister, announced on Monday that Branson would take up his position this summer. He said he was “delighted that with Mark Branson we’ve succeeded in winning such an experienced, internationally recognised expert for the German financial watchdog”.

Scholz said Branson would be responsible for enacting reforms at BaFin designed to give the agency “more bite”. “Trust in Germany as a financial centre is important and BaFin is a crucial factor for that trust,” he added.

BaFin has come under mounting criticism for failing to detect the Wirecard fraud. The company revealed last June that €1.9bn was “missing” from its accounts. Soon afterwards, it collapsed into insolvency.

The financial regulator has been faulted by a parliamentary inquiry into the scandal for going after short-sellers and critical journalists rather than the perpetrators of the Wirecard fraud.

[Branson] must turn the often sleeping giant BaFin into a strong custodian of the financial markets

Scholz announced a fundamental overhaul of BaFin in February designed to prevent a repeat of the fiasco. He said a special financial task force would be created to carry out forensic audits of companies suspected of fraud, and BaFin reformed to make it “more powerful, more rigorous and more effective”.

Gerhard Schick, head of consumer lobby group Finanzwende, welcomed Branson’s appointment but said he faced a “mammoth task”: “He must turn the often sleeping giant BaFin into a strong custodian of the financial markets.” He said he would require “clear backing from Berlin, otherwise he won’t succeed”.

“It’s critical that he effects a change of culture [at BaFin] and gives it a good airing with a fresh breeze from outside,” said Lisa Paus, finance spokeswoman for the opposition Greens. “He should get all the resources and qualified staff that he needs for that.”

A graduate in maths and management from Cambridge university, the British-born Branson was the first non-Swiss national to be appointed head of Finma when he took the reins there in 2014.

Branson joined Finma in 2010 to oversee Switzerland’s banking sector and was named deputy chief executive in 2013. He had previously worked at Swiss lenders UBS and Credit Suisse, in Tokyo, London and Zurich. At UBS he led its Swiss bank and its wealth management division.

Branson’s appointment as head of Finma was controversial in some quarters in Switzerland. He had been in charge of UBS’s Japanese securities unit between 2006 and 2008, a period during which employees tried to manipulate the London Interbank Offered Rate (Libor).

As a result, he faced calls to step down in 2012 after UBS reached a SFr1.4bn ($1.6bn) settlement with regulators, including Finma. But the regulator pointed out at the time that none of the investigations had found “any indication” that he knew of any Libor-related wrongdoing.