A Liberal, a Banker of the Year


Who secures the Aaa of EIB.

Liberals are not exactly popular among bankers, as they stand for competition and a market economy, where many bankers want state protection and privileges. This makes the award for Dr. Werner Hoyer, President of the European Investment Bank (EIB) as Banker of the Year, particularly noteworthy. The laudation from President of the European Commission, Ursula von der Leyen, contains many deserving facts and can be read here. Werner Hoyer is a member of the FDP, the Free Democratic Party in Germany, where he made his career up to the Foreign Office.

Werner Hoyer has been at the helm of the EIB since 2012, which, like few other banks in Europe, also has the undisputed top rating from all major credit rating agencies. Moody’s just released a report with lots of detail.

“The credit profile of the European Investment Bank (EIB) reflects its strong financial metrics, including robust asset quality and asset performance as well as unfettered access to diverse funding markets. The EIB has a long track record of very low levels of non-performing loans (NPLs),” writes Moody’s Investors Service in its “Issuer In-Depth” annual credit analysis, “reflecting its prudent project selection as well as effective monitoring and superior risk-management capabilities.”

According the international rating agency, the EIB is also among the few supranational issuers with access to central bank liquidity, in its case to the European Central Bank’s (ECB) main refinancing operations as well as the Swiss National Bank (SNB): “This ensures access to liquidity in the highly unlikely event it lost access to the capital markets.”

Moody’s sees among the EIB’s shareholders, the EU member states, a strong willingness and ability to support the bank if required. In a stress scenario, says Moody’s, the EIB would be one of the few sources of long-term funding for projects in the EU countries. The EIB is also the key institution implementing the European Fund for Strategic Investments (EFSI) and its successor programme, InvestEU. Similarly, the EIB has played an active role in the EU’s coronavirus crisis response.

“The EIB’s credit challenges, which are marginal at the Aaa rating level, stem from its high leverage compared to many peers as well as only moderate liquidity buffers, although its lending activities carry low intrinsic risk. Moreover,” argue Moody’s experts Steffen Dyck, Raphaele Auberty, Dietmar Hornung and Alejandro Olivo, “leverage has been on a declining trend over the past several years, and the comparatively only moderate liquidity position is mitigated by ECB access, very strong liquidity management and the generally high quality of treasury assets.”

Accodring to Moody’s findings, the EIB’s capital base is now stronger than it was before the United Kingdom’s (UK, Aa3 stable) exit on 31 January 2020 after its remaining shareholders replaced the UK’s share, and Poland (A2 stable) and Romania (Baa3 negative) provided additional capital.

But even with the best conditions, political and economic common sense in the member states of the EU is also important for the EIB: “Downward pressure on the EIB’s rating could emerge in a scenario of a significant and multiyear deterioration in its intrinsic financial strength coupled with a reduced ability to provide support (as evidenced by material rating downgrades of key shareholders), or if shareholders demonstrated less willingness to provide support in case of need.”

Moody’s credit analysis elaborates on EIB’s credit profile in terms of capital adequacy, liquidity and funding and strength of member support, which are the three main analytical factors in Moody’s Supranational Rating Methodology.

crop faceless black businessman leaving metro station

Management Board of the Auditing Association of German Banks​​ Changing


Former colleague of the later Greensill Bank Supervisory board member has left

The Federal Association of German Banks (BdB) is drawing initial conclusions from the Greensill Bank‘s 3 billion euro compensation case. As the organization confirmed on request of the Börsen-Zeitung, it will analyze the structure of its auditing association and its staff with the help of consulting firms in the coming months. The aim is to reorganize the auditing association’s risk management system and develop its staff in such a way that a case like Greensill is not repeated. Bank President Hans-Walter Peters informed the staff of the auditing association about this, reports Börsen-Zeitung.

The reform announced by BdB President Peters, which also aims to digitize the auditing association, is likely to cost the association a single-digit million amount. ZEB and Deloitte are to advise the organization on developing a target image for a more agile auditing association, while headhunter Egon Zehnder will support them in personnel development and acquisition. First results are expected in early autumn.

A personnel change has already been determined, says Börsen-Zeitung: Manfred Kühnle, spokesman for the board of the 160-person auditing association, will probably take his hat around mid-month, it said. Internally, he has already said goodbye to employees, as can be heard. Hans-Dieter Bienen, who is changing from Deloitte, will initially take up his post on an interim basis.

Manfred Kühnle is an auditor by profession: 1983 – 1985 training as a banker, 1985 – 1986 military service, 1986 – 1992 study of business administration at the Friedrich-Alexander-Universität Erlangen-Nürnberg (Dipl. Kfm.), 1992 – 2002 PwC Deutsche Revision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Frankfurt am Main (1997 tax consultant exam, 1999 auditor exam, 2001 Certified Public Accountant) and from 2003 Auditing Association of German Banks, Cologne (member of the board since 2004, spokesman for the board since 2009).

Subscribe to get access

Read more of this content when you subscribe today.

photo of red and white toy car

Investment Grade Møller Mobility

Read, Reports

Møller Mobility thrives in symbiosis with Volkswagen.

Nordic Credit Rating (NCR) assigned a ‘BBB-‘ (that reads triple B minus) long-term issuer rating to Norway-based car importer and retailer Møller Mobility Group AS (Møller Mobility). The rating agency’s outlook for this credit rating is stable. At the same time NCR assigned an ‘N-1+’ (that reads N One plus) short-term issuer rating. NCR has also assigned ‘BBB-‘ (triple B minus) issue ratings to Møller Mobility’s senior unsecured bonds.

Nordic Credit Rating was established as a financial infrastructure company by 30 Nordic banks and institutions to lower the threshold for issuers to obtain and maintain a credit rating. Being registered with European Securities Markets Authority as a credit rating agency, their research is produced by an analytical team and is based on local expertise.

“The long-term rating reflects the company’s strong position in its core market. It is further supported by the company’s close relationship over almost 75 years with car manufacturer Volkswagen AG, which provides scale and diversification through a range of brands, and the joint venture Volkswagen Møller Car Finance. The rating is also underpinned by the company’s moderate financial leverage and strong cash position, supported by unutilised credit facilities”, is the rating agency’s rationale for this rating.

According to NCR, the rating is constrained by the company’s operating environment. It is a cyclical industry undergoing rapid change through the development of low-emissions vehicles, which could potentially affect the industry’s structure. “The company’s large off-balance-sheet repurchase portfolio, with a maturity profile of less than two years, could materially affect the company’s short-term liquidity and potentially result in losses should the market experience rapid deterioration”, warns NCR.

“The stable outlook reflects our expectation that Møller Mobility will maintain its market-leading position in its geographical segments and benefit from an economic recovery on the back of increased vaccination against COVID-19 and the easing of pandemic-related restrictions by mid-2021 in its core markets. It also reflects our expectation that Volkswagen will continue to deliver popular models of cars in a timely matter”, says NCR.

The rating agency sets the following standards for improving the rating (see also the Full Rating Report:

Subscribe to get access

Read more of this content when you subscribe today.

photo of person putting his hands up

After S&P Global, also Moody’s on Fortune 500


The two leading rating agencies in the world are among the 500 largest companies in the USA.

Anyone who thinks the rating agencies industry is a marginal issue should study the Fortune 500 list. Moody’s Corporation has been named to the Fortune 500 for the first time, reflecting the strength and momentum of its strategy as a global integrated risk assessment firm and the resilience of its global employee base.

The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks 500 of the largest United States corporations by total revenue for their respective fiscal years. The name of the Fortune 500 ranking is synonymous with business success. Now there is the 67th edition of the ranking of America’s largest companies. Together, the 500 corporations on this year’s list generated $13.8 trillion in revenue, or some two-thirds of the U.S. economy.

When Gabler Verlag published the first book in German on the subject of “Credit Rating by International Agencies” exactly 30 years ago, hardly anyone would have thought that a relatively small organization of analysts would make it into this prestigious ranking. The book by Gabler Verlag was based on the publication of the first doctoral thesis in German on this topic. A central theme of this book was the controversial forecast that the two leading rating agencies Moody’s and Standard & Poor’s would gain in importance worldwide. What was a controversial prognosis at the time is a provable fact today.

“Moody’s achieved record revenue growth in 2020, in part because we never wavered in our support for each other and because we stayed focused on providing expertise to our customers when they needed it most,” said Rob Fauber, President & CEO of Moody’s. “Our inclusion in the Fortune 500 recognizes the contribution of our employees in achieving these results – even during challenging times – and I am deeply grateful for their dedication.”

Moody’s generated $5.4 billion in revenue in 2020, due in large part to strong market demand for Moody’s data, analytics, and trusted insights during the COVID-19 pandemic. Recognition in the Fortune 500 reflects the clarity of Moody’s strategic direction and its growth during a period of unprecedented market turbulence.

Building on the heritage of the rating agency, Moody’s Investors Service, in 2007 Moody’s launched Moody’s Analytics to further build the firm’s data and analytical capabilities, serving a broader range of customers to help them make better decisions about a wider range of risks.

While Moody’s made it onto this list of success for the first time, competitor S&P Global is already on a higher rank. Dealing in financial information and analytics, S&P Global is the parent company of subsidiaries such as S&P Global Ratings and S&P Global Market Intelligence. The company also owns a majority stake in the S&P Dow Jones Indices. Therefore, these two companies on the Fortune 500 list are not fully comparable. Moody’s rank is 500, S&P Global’s rank is 393.

The Role of Ratings in Greenwashing

Agencies, Criteria, Read

Austria’s Financial Market Authority (FMA) warns consumers against “greenwashing” in the new edition of their consumer information series “Let’s talk about money”.

“Greenwashing” means that a financial product is advertised as environmentally friendly, green or sustainable – i.e. colored green – even though it does not actually meet these standards. In this way, potential investors are to be tempted to make investments that they would not have made or would only have made at a different price with knowledge of the actual effects of the financial product.

“Greenwashing” is carried out in particular through misleading or false information in advertising, consultations and product documentation. It is often associated with a corresponding optical design, for example through the use of the color green and through representations of unspoiled nature.

Furthermore, terms such as “ecological” or “green” are often used, or a certification that does not even exist is advertised, reports the FMA. The FMA report could be supplemented by a warning about sustainability ratings that were either developed in a fast-track process and thus ignoring a number of important aspects, or even applied without any technical expertise.

Environmental, Social, and Corporate Governance (ESG) refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. Some rating agencies are providing investors with its ESG analysis through a digital platform, comprising more than 1,600 companies in the MSCI world stock market index. They claim to have methodology that is applicable to the whole universe of corporates, from small and medium-sized companies to large listed multinational enterprises.

Such claims are a clear indication that the complexity of the analysis is being underestimated, especially when a team of analysts who is only very small in relation to the number of companies assessed and overwhelmed by the size of the task is involved in the acquisition and evaluation of the data.

Therefore, investors should heed the regulatory warnings: “Sustainable investments are not per se safer than comparable conventional investments. Always ask questions and be critical,” warns the FMA Board of Directors, Helmut Ettl and Eduard Müller. Particular caution is required on the so-called “gray capital market”, that is, the unregulated capital market.

Investments in “green real estate”, wind and solar parks or hydropower plants are often offered in the “gray capital market”. If such projects are designed as qualified subordinated loans, company investments, bonds or profit participation rights, one should be aware that if the company becomes insolvent, all the money invested can be lost.

stonewall palace

The Losers of the Globalization Years


Five Worst-Performing Countries

This blog article is based on “Country Risk – The Bane of Foreign Investors” (Springer, 2020) by Norbert Gaillard.

I focus here on the countries whose reputation declined significantly during the globalization years. Table 1 lists the five economies whose country risk ratings fell the most dramatically during 1988–2013, as measured by Euromoney and International Country Risk Guide (ICRG) ratings.

Table 1: Five worst-performing countries during the globalization era – according to Euromoney and ICRG

CountryDowngrades in pointsCountryDowngrades in points
Italy−30.9United Kingdom−8.0
Notes: Euromoney and ICRG ratings are established on a 0–100 scale, where 0 (resp. 100) corresponds to countries that are the most (resp. least) risky. For Euromoney, the ratings published in September 2013 are compared with those published in September 1988. For ICRG, the average ratings of 2013 are compared with those of 1988.

Sources: Author’s calculations and classifications based on Euromoney publications and ICRG database.

It is noteworthy that only 2 of the 10 worst-performing countries presented in Table 1 – Greece and Venezuela – were hit by a major shock (e.g., a major sovereign debt crisis) during the globalization era. When one considers that the countries most severely downgraded by Euromoney and ICRG are developed economies, it is clear that those countries experienced (and continue to experience) a slow decline in their economic and financial position.

60% of the worst performers are eurozone members. The raters were more concerned about the weakening of these eurozone members’ credit position than about the significance of any deterioration in their respective business climates. Japan provides a good illustration of the poorly performing countries more generally. This country was at the top of Euromoney’s rankings in the late 1980s, but its credibility faded after decades of economic stagnation, deflation, and rising debt.

Table 2 lists the five economies whose associated country risk ratings declined the most during 1995–2013, as measured by The Heritage Foundation’s Index of Economic Freedom (IEF) ratings; during 1996–2013, as measured by the Fraser Institute’s Economic Freedom of the World (EFW) ratings; and during 1999–2013, as measured by OECD scores.

Table 2: Five worst-performing countries during the globalization era – according to the IEF, EFW, and OECD

CountryDowngrades in pointsCountryDowngrades in pointsCountryDowngrades in notches
Thailand−8.3Hong Kong−0.23Lebanon−2
Notes: IEF ratings are established on a 0–100 scale, where 0 (resp. 100) corresponds to countries that are the most (resp. least) risky. EFW ratings are established on a 0–10 scale, where 0 (resp. 10) corresponds to countries that are the most (resp. least) risky. OECD country risk ratings are established on a 0–7 scale, where 7 (resp. 0) corresponds to countries that are the most (resp. least) risky. For the IEF, the ratings published in January 2014 are compared with those published in December 1994. For the EFW, the ratings published in September 2013 are compared with those published in January 1996. For the OECD, the ratings as of 1 September 2013 are compared with those as of 1 September 1999.

Sources: Author’s calculations and classifications based on the Heritage Foundation, Fraser Institute, and OECD databases.

Three fourths of worst-performing economies presented in Table 2 were hit by a major shock during the globalization era (e.g., a sovereign debt crisis or an expropriation act). The profile of these countries differs radically from those listed in Table 1. In fact, the most severe downgrades announced by the Heritage Foundation, the Fraser Institute, and the OECD involved the ratings of developing and emerging economies only.

For example, the Latin American states that opted for Bolivarian-style policies (Argentina, Ecuador, and Venezuela) as well as African countries (e.g., Zimbabwe) frightened international investors by nationalizing foreign assets. Other economies were shaken by wars, revolutions, or noxious political atmospheres (e.g., Egypt and Lebanon). One can conclude that the Heritage Foundation, the Fraser Institute, and the OECD lowered the ratings of countries in which the business climate had deteriorated the most.

Tables 1 and 2 are instructive because they reveal two distinct paths in the assessment of country risk. On the one hand, Euromoney and ICRG tend to penalize countries that are unable to preserve their credit position and competitiveness. On the other hand, the Heritage Foundation, the Fraser Institute, and the OECD tend to be ruthless when rating economies that challenge the most fundamental capitalist rules (especially the enforcement of property rights).

black chain

Scope’s Greensill Bank Rating Tragedy

Agencies, Authorities, Governance, Read, Regulations

The Federal Financial Supervisory Authority (BaFin) filed criminal charges Against The Bank’s Board Members.

The Federal Financial Supervisory Authority (BaFin) in Germany received monthly reports from Greensill Bank AG (Greensill Bank) about the bank’s balance sheet data from January 2019 on. This is evident from the answer given by Parliamentary State Secretary Sarah Ryglewski on March 12, 2021 to written questions from members of the German Bundestag (Drucksache 19/27704). Greensill Bank’s total assets increased rapidly in 2019 from EUR 763 million at the beginning to EUR 3.8 billion.

Subscribe to get access

Read more of this content when you subscribe today.

On March 3, 2021, BaFin finally issued a ban on the sale and payment of the bank due to the threat of over-indebtedness. The bank had to close for business with customers. BaFin prohibited it from accepting payments that were not intended to repay debts to the bank (moratorium). In addition, the BaFin filed criminal charges against the board members of Greensill Bank.


Experts, Read


A sustainability report provides information on an organization’s health, including economic, environmental, and social performance against set guidelines or an established framework. Over the past few decades, business performance is increasingly being approached from a multi-dimensional perspective. This is because a pro-active corporate sustainability reporting system for assessing the performance of an organization should address impacts within and beyond the organization on stakeholders, including  the host community, supply chain actors and resulting or associated impacts on people, planet and profits.

The reporting of the business implication of climate change in sustainability reporting becomes even more significant as we celebrate Earth day on April 22nd. The potential financial implications of climate change are receiving increasing attention and recognition, with investors and other stakeholders encouraging companies to identify, assess and report publicly on the financial implications of climate change on their businesses.

This is evident in numerous forums and initiatives, for example the Carbon Disclosure Project (CDP) and Institutional Investor Group on Climate Change (IIGCC) and other initiatives of the World Economic Forum (WEF). With the Increasing public awareness and concern, taking action on climate change is also starting to become a reputational and strategic issue for companies. This then behoves on organizations to be intentional about ensuring the Sustainability reporting is all encompassing. 

In other words, sustainability reporting is an instrument capable of helping companies become aware of their strengths and weaknesses, better manage corporate risk, improve regulatory compliance, innovate and identify potential synergies and interdependencies across their value chain and supply chain. 

The Nigerian Corporate Governance Code includes a comprehensive section on sustainability, and requires that Boards “establish policies and practices regarding its social, ethical, safety, working conditions, health and environmental responsibilities as well as policies addressing corruption.” Boards are also responsible to monitor the implementation of these policies. Sustainability also takes the form of “ESG Ratings”, “Circular Economy Initiatives” and “Integrated Reports”, which introduce environmental, social and governance KPIs to enhance the positive impact that companies have on society. Specifically, the Institute of Directors Nigeria and Afrikairos have been involved in advocating for the adoption of sustainability reporting, and the operationalization of sustainability across business functions, as a core part of the tenets  for good corporate governance. 

With sustainability becoming more institutionalized as part of the corporate governance best practices, and with the Institute of DIrectors (IoD) Nigeria having a significant role to play to raise awareness and build the capacity of its members and non-members to set high standards for sustainability governance in Nigeria, the Institute has partnered with Afrikairos GmbH, supported by Circular Economy Innovation Partnership (CEIP) and Growing Businesses Foundation (GBF), to bring together corporate Nigeria and relevant regulators in a half-day stakeholder workshop. The aim is to provide insight into levels of adoption, interests as well as capabilities within corporate organizations on sustainability reporting. This webinar introduces a range of perspectives on sustainability , circular economy, ESG Ratings and Integrated Reporting and paves the way for a series of future workshops to be delivered by IoD and Afrikairos in Q3, 2021.

Learning Objectives

  • To introduce, identify global trends and emphasize the importance of sustainability reporting, circular economy, integrated reporting and ESG Ratings to Nigerian corporates and corporate governance.
  • To provide tools for directors to meet their sustainability responsibilities
  • To explore how sustainability reporting can be useful to build organizational resilience 
  • To gain insight on the requirements and benefits of sustainability reporting
  • To understand the level of adoption of sustainability reporting by stakeholders in Nigeria 
  • To gain insight on board practice of sustainability reporting: lessons from domestic and international perspectives 
  • To be able to apply concepts of sustainable reporting to address sustainability challenges in organisations
  • To be able to identify, act on, and evaluate professional and personal actions with the knowledge and appreciation of interconnections among economic, environmental, and social perspectives
  • To have a deeper understanding of social responsibility and impact, both as directors and citizens
  • To be able to embrace and improve sustainability and business performance
  • To be able to motivate and engage directors and management towards adopting sustainability reporting and ESG Ratings

Target Audience/Participants

  • Chairmen, CEOs, COOs, Executive and Non-Executive Directors 
  • Company Secretaries, Chief Regulatory Officers and Legal Heads
  • Chief Financial Officers (CFOs), Chief Value Officers  and Heads of Audits & Compliance
  • Chief Human Resource Officers, Chief Marketing /Sales Officers
  • Corporate Affairs Executives and Head of Foundations
  • Sustainability Executives and Heads of Risk/Compliance, etc.
  • CEOs of Supply Chain companies to sustainability-driven corporates

Program Structure and Agenda


Stakeholder Workshop on Operationalizing Sustainability & Circular Economy: Measuring, Monitoring, Reporting, Impact Investing, ESG Ratings.

Date:   Thursday, April 22, 2021 

Time:   3pm-7pm

Venue:   Zoom (Registration link to be provided) 

Expected no. of Participants:  600 participants (Members & Non-Members)

Program Agenda

3pm – 6.30pm

15.00 – 15.05Opening Remarks Moderator/Host:
Dr Ndidi Nnoli-Edozien
Partner, Afrikairos & Chair, Circular Economy Innovation Partnership, Growing Businesses Group
15.05 – 15.15Welcome SpeechChief
Chris O. Okunowo
F.IoD, President/Chairman of Council, IoD Nigeria
15.15 – 15.45Goodwill MessagesDr Dolapo Fasawe
DG Lagos State Environmental Protection Agency (LASEPA)
Saeeda Sabah Rashid
Lead Governance Specialist, World Bank, Nigeria
Prof K. Amaeshi
University of Edinburgh/President, Association of Sustainability Professionals, Nigeria
Iheanyi Anyahara, PhD
FCAActing Executive Secretary/CEO Financial Reporting Council of Nigeria
Dr Innocent Okwuosa 
Chairman, Nigerian Integrated Reporting Committee 
Dr Innocent Onah
Climate & Green Growth Expert, AfDB; Coordinator, Nigeria Circular Economy Working Group

Session I (Corporate Perspective)
15.45 – 15.55Keynote AddressOscar Onyema
DG/CEO, Nigerian Stock Exchange (NSE)
15.55 – 16.55Panel Discussion
Panelist-1Uto Ukpanah 
Company Secretary, MTN Nigeria Communications Plc
Panelist-2Eunice Sampson 
GM/Head, Sustainability, Dangote Cement Plc 
Panelist-3Amaka Onyemelukwe
Director, Public Affairs, Communications and Sustainability, Coca-Cola Nigeria
Panelist-4Omobolanle Victor-Laniyan
Head of Sustainability, Access Bank Plc.
Panelist-5Doerte Weidig
Panelist-6Clem Ugorji
CEO, Circularium Africa Advisory
Session II (Investors’ Perspective)
16.55 – 17.05Keynote AddressPatrick Kabuya
Convener, Africa Integrated Reporting Council, Senior Governance Specialist, World Bank.
17.05 – 18.05 Panel Discussion
Panelist-1Kola Aina
General Partner, Ventures Platform
Panelist-2Agharese Onaghise
Executive Secretary/CEO, Food and Beverages Recycling Alliance (FBRA)
Panelist-3Dr Oliver Everling
CEO Rating Evidence, GmBH, Europe 
Panelist-4Benedikt Hoffmann
Managing Partner, Afrikairos
Panelist-5Gerritt Ledderhof
Team Lead, Climate and Responsible Investment, Aegon Asset Management, Netherlands
Panelist – 6Folashade Ambrose-Mebedem
Rising Tide Africa, Sustainable Development Director, Lafarge
18.05 -18.25Comments, Questions and Answers (coordination of chatroom)Dr Natalie Beinsich
Way forward
18.25 -18.30Prof Nat Ofo
F.IoD, Chairman, Research & Advocacy Committee, IoD Nigeria
18.30 – 18.35Saeeda Sabah Rashid
World Bank Representative
18.35 -18.40Prof Kenneth Amaeshi
Chair in Business and Sustainable Development, University of Edinburgh
18.40- 18.45Prof Chukwumerije Okereke
Professor of Environment and Development in the Global Development Research Division and Department of Geography and Environmental Science at the University of Reading, United Kingdom
18.45- 18.50Prof Serge Miranda
Professor of Computer Science at the University of Nice Sophia-Antipolis, France
18.50 – 18.55Dr Ndidi Nnoli-Edozien
Partner, Afrikairos & Chair Circular Economy Innovation Partnership
18.55 -19.00Closing Remarks/ Vote of ThanksDele Alimi
M.IoD Director General/CEO, IoD Nigeria

Rating Technology

Read, Technology

Rating technology is the collection of techniques, skills, methods, and processes used in the production of rating services or in the accomplishment of rating objectives.

Rating technology comprises the knowledge of techniques, processes, and the like, and can be embedded in computers to allow for operation without detailed knowledge of their workings, for example in the case of articial intelligence. Rating systems applying technology by taking an input, changing it according to the rating system’s use and model, and then producing an outcome in the form of rating symbols are referred to as rating technology or technological rating systems.

The simplest form of rating technology is the development and use of basic tools. The printing press, the telephone, and finally the internet, have lessened physical barriers to communication and allowed decision makers to interact freely on a global scale, making use of most advanced rating technology, processing data in unprecedented quantities.

Technology has many effects. It has helped develop more advanced economies and has allowed the rise of a new profile of rating analysts. Innovations have always influenced the values of a society and raised new questions in the ethics of technology. Examples include the rise of the notion of efficiency in terms of human productivity, and the challenges of social credit systems.

Philosophical and political debates have arisen over the use of rating technology, with disagreements over whether rating technology used for social credit systems improves the human condition or worsens it. Some movements criticize the pervasiveness of social rating technology such as commonplace webcams and surveillance cameras, arguing that it alienates people. Proponents of social credit systems view continued technological progress as beneficial to society and the civilization.

The Dynamics of Free Trade and FDI during the Globalization Era

Histories, Read

Multilateralism waned, but the process of trade liberalization continued.

This blog article is a short excerpt from Country Risk – The Bane of Foreign Investors (Springer, 2020) by Norbert Gaillard.

International trade went through unexpected and paradoxical changes during the globalization era (1991–2016). Multilateralism waned, but the process of trade liberalization continued. For instance, the average tariff rate for the Group of Twenty (G20) fell from 13% during 1991–1994 to 5% during 2013–2016.1 How can this evolution be explained?

After the General Agreement on Tariffs and Trade (GATT) was superseded by the World Trade Organization (WTO) in 1995, several challenges arose that rendered multilateral trade talks increasingly complex and lengthy. First, under the WTO regime, tariff rates and market-opening commitments are binding, which deters members from further liberalizing their trade policy. Second, the WTO’s admission of China in 2001 stirred mistrust among other WTO members, whatever their income level. Third, as industrialized countries had reduced their tariffs substantially during the previous GATT rounds, they had little maneuvering room left to obtain trade liberalization in emerging countries – with regard to financial services, for example. Fourth, the sustained growth of international trade in the 1990s and 2000s called into question the relevance of new multilateral talks.

In this context, it is not surprising that the Doha Round, launched in 2001, failed to achieve any trade liberalization agreements (see Cohn 2007). However, some minor progress was observed with the Nairobi Package of 2015, which removed subsidies for farm exports. In fact, other means were employed to effect trade liberalization during 1991–2016: unilateral actions, regional trade agreements (RTAs), and international investment agreements (IIAs).

Unilateral tariff cuts by several emerging countries (e.g., China, India, and Indonesia) were part of offshoring-led development strategies designed to attract foreign investments. These countries’ final objectives were to integrate themselves into global value chains, absorb knowledge and technologies, and export an even wider range of products and services.

The signing of RTAs was another feature of globalization. The number of RTAs in force rose by a factor of 5 within 25 years. However, the nature of those agreements changed significantly during that time span. Contrary to what was observed at the dawn of globalization, the bulk of RTAs signed in the 2010s were “deep” agreements. Thus, they transcend traditional tariff cuts to cover multiple policy areas: competition policy, anti-dumping measures, environmental laws, labor market regulations, and so forth (see Mattoo et al. 2017).

The boom in IIAs was certainly the most salient feature of the past three decades. These agreements, which include treaties with investment provisions (TIPs) and bilateral investment treaties (BITs), contributed to reshaping international business relations and increasing the levels of protection enjoyed by foreign investors. A typical IIA’s main provisions include protection against expropriation risk, convertibility risk, and arbitrary or discriminatory measures; they may also ensure “protection and security”, and/or “most favored nation” treatment.2

Several conclusions can be drawn from these trends in international investment rulemaking. First, they reflected the outright triumph of globalization. Second, they enabled developing countries to gain credibility. Vashchilko (2011) shows that risky economies that signed BITs managed thereby to reassure international investors, which stimulated FDI inflows. Third, the growing proportion of BITs involving exclusively low- and middle-income countries evidenced the ongoing enlargement of the group of capital-exporting nations.3 Such evolution went hand in hand with the mutation of capitalism.

The growing geopolitical tensions between China and the United States are likely to undermine such dynamics of free trade and foreign direct investment. In fact, it seems we are entering what I call the “post-globalization era” (Gaillard 2020). Post-globalization involves “a logic of high interdependence in the economic, trade, migration, and technological areas between States (and their companies) whose geopolitical interests are convergent, or at least compatible. This implies the elimination, the reduction, the selection, and/or the control of dependence and interdependence relations.” This new paradigm will oblige policy makers and economic leaders to revise radically their diplomatic, economic, and financial strategies.

1 Author calculations based on the World Bank’s World Development Indicators. The G20 comprises Argentina, Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States. It accounted for more than 80% of merchandise trade in 2016 (author calculation based on https://data.wto.org).

2 The “protection and security” provisions require that host countries take measures to prevent the destruction of an investor’s property.

3 About 33% of the BITs that entered into force during 2016 did not involve a high-income economy, compared with less than 12% in 1991 (see source).


Cohn, T. H. (2007), “The Doha Round: Problems, Challenges, and Prospects,” in Studer, I. and Wise, C. (Eds.), Requiem or Revival? – The Promise of North American Integration, Brookings Institution Press, Washington, DC.

Gaillard, N. (2020), “Le COVID-19, accélérateur de la post-mondialisation,” Politique Etrangère, Vol. 85, No. 3.

Mattoo, A., Mulabdic, A. and Ruta, M. (2017), “Trade Creation and Trade Diversion in Deep Agreements,” World Bank Policy Research, Working Paper 8206.

Vashchilko, T. (2011), Three Essays on Foreign Direct Investment and Bilateral Investment Treaties, Dissertation in Political Science, Pennsylvania State University.

selective focus photography of magazines

Requirements Relating to Press Releases or Reports

News, Read, Reports

The text of publications must meet strict requirements.

The European Securities and Markets Authority considers that a credit rating or rating outlook should be accompanied by a press release or report. The press release or report should explain the key elements underlying the credit rating or rating outlook.

At least the following elements should be included::

Subscribe to get access

Read more of this content when you subscribe today.

Where it would be disproportionate in length to include the full underlying detail of the above elements in the press release or report accompanying the credit rating or rating outlook, the European Securities and Markets Authority expects that credit rating agencies make clear and prominent reference where this underlying detail can be directly and easily accessed through direct web-link. Notwithstanding this, the Authority considers that the inclusion of the core of the above elements in the press release or report is necessary and proportionate to the overall length of the press release or report.

Rating Forest Investments

Criteria, Definitions, Investors, Read

Understanding the importance of sustainability has popularized an asset class that used to be reserved for the state, churches and nobles. Forest – to be precise its wood – has always served people as fuel, product and building material. Forest has now become the epitome of sustainable investments. The idea of sustainability emerged in a time of crisis and scarcity. Around 1700, the mining industry and livelihood of thousands was threatened in Saxony. The problem was an acute scarcity of timber. The mining industry and smelting of ores had consumed whole forests. Trees had been cut at unsustainable rates for decades without efforts to restore the forests. In Germany, the term sustainability is associated with Hans Carl von Carlowitz. He was raised in and influenced by the aforementioned environment of wood scarcity. He traveled widely in his youth and learned much from the forced discipline of the French minister Jean Baptiste Colbert, who had enacted a forestry reform in France. Carl von Carlowitz’ view that only so much wood should be cut as could be regrown through planned reforestation projects, became an important guiding principle of modern forestry.

In this preliminary article you can learn more about some risks and rewards of buying forests and what you should consider when buying forests. Given the popularity of forest investments, the question arises as to which ratings are available to investors as decision-making aids. The first question to be asked is which instruments can be used by investors to tap into this asset class. The most common investments in forests are shares, direct investments or closed-end funds. Whereas in direct investments investors invest directly in one or more trees on specific areas and leave the management to a service provider, closed-end forestry funds are less individual.

  • A forestry share is a security which securitises a share in a stock corporation whose capital is invested to a large extent in forest property or wood processing. Primarily Scandinavian and North American forestry stock corporations are traded. There are no German forestry stock corporations with significant free float on the stock exchange. Buying forestry shares does not necessarily mean planting new trees.
  • A closed-end forestry fund or closed-ended forestry fund is a collective investment model based on issuing a fixed number of shares which are not redeemable from the fund. Unlike open-end funds known for corporate stock and bond investments, new shares in a closed-end forestry fund are not created by managers to meet demand from investors. Instead, the shares can be purchased and sold only in the secondary market, which is the original design of the mutual fund, which predates open-end mutual funds but offers the same actively-managed pooled investments.
  • Direct investment in forest means becoming the owner of the forest yourself and thus acquiring all the rights and obligations of a forest owner. The investor needs to be able to maintain regular forest care. As a forest owner, you also have certain obligations, since you are legally obliged to ensure road safety. This means that all trees and branches that are located in places with increased traffic – for example on country roads or hiking trails – have to be felled or trimmed as soon as they pose an increased risk for humans. Buying forests also means taking responsibility.

The implications for the rating approaches to these investment alternatives are considerable.

Forestry shares being tradable on the stock exchange at any time are subject to extreme fluctuations in value. The valuation of most listed forestry shares has a history of having fluctuated by several hundred per cent. Such fluctuations in value mean that ratings of these stocks can quickly become out of date. In fact, a buy recommendation can turn into a sell recommendation within a day if the stock market price quickly exceeds the fair value. Most forestry share companies are predominantly wood processors, who are strongly affected by economic fluctuations and thus by fluctuations in pulp or timber prices. Therefore there is a strong dependence of many forestry shares on economic trends.

Direct forestry investments in precious woods, on the other hand, can react better to market fluctuations by postponing the harvest. The trees are left in the forest until the harvest is worth it – they become bigger, taller and more valuable every day. Fuctuations in precious wood prices have historically been significantly lower than those of timber or wood used for pulp production.

In Germany in particular, the very contradictory regulations must be observed. For decades, the German government has not consistently supported wealth creation through property acquisition. Pay attention to the municipality’s right of first refusal. In this sense, there are no secure legal bases for forest investments in Germany, because rights of first refusal can hinder both buying and selling. In addition, the following contradictions must be observed.

The yields generated from a direct forestry investment are generally tax-exempt while the price gains of forestry shares and forestry shares dividends are subject to the almost 30 per cent flat rate withholding tax including solidarity surcharge and church tax. On the other hand, the transaction costs are significantly higher than with stocks. In addition to the purchase price, land transfer tax, notary and fees, which often make up ten per cent of the purchase price, are added, thus significantly reducing the returns for forest investors. Property tax has to be paid annually and wood production in Germany is relatively expensive due to environmental regulations and certifications. In addition to the actual purchase price, there are also other costs when buying a forest which would not be part of the rating analysis of an independent forest rating. For example, you have to include the costs for the notary, usually 1.5% of the purchase price (the percentage can be higher for small areas) and the property transfer tax, around 4% – 6.5% of the purchase price. You must also not ignore the broker’s commission.

As a forest owner, you also have to pay additional costs.

Property tax, accident insurance and, if applicable, contributions from the soil and water associations are to be mentioned here. With the management of the area, the ancillary costs are always offset by possible income from the sale of wood.

Forest areas in other countries offer far higher returns, although buying forest in foreign countries can be difficult for foreigners. It is much easier to hire companies to lease or buy forests or fallow land in other countries, to manage them in order to generate yields for investors. The country rating must be taken into account for every investment abroad. The country rating is used to assess the economic, social and political risk that an investor will be prevented from receiving the income due to him.

Forest investment providers advertise the scarcity of forest. They argue, that the benefits of forestry investments are the growing demand for the raw material wood. Whether there are fewer and fewer forest areas and whether the demand for wood exceeds the supply has to be tested continuously.

Forestry investments are not always socially beneficial, especially when stock corporations and other big companies buy cheap land in foreign countries and perhaps even displace locals, or the price of land for local residents rises immeasurably as a result of land purchases. Forests are not always ecologically friendly. Thousands of hectares with cloned eucalyptus or teak planted in rows are no gain for nature. Many insecticides and pesticides that pollute and destroy the soil and the environment are sometimes used to increase output.

In any case, structurally rich forests with many different tree species offer a better and safer alternative to planted conifer monocultures that are based on only one tree species. Although these grow faster, they are also susceptible to storms, snow, ice and pests. Mixed forests of deciduous and coniferous trees are not only more stable and better adapted to climatic changes, they also allow you to react more quickly to changes in the demand for wood species on the market.

Any forest rating should also pay attention to the age of the forest. Young forests, in which there are only a few old trees, initially require more maintenance. Of course, they can more easily be designed according to your ideas. The young forest will initially generate little income from wood sales through its maintenance. Forests of old age with significantly taller and thicker tree trunks enable an early profit from the logging and sale, but require care for the new generation of trees.

Good soil and suitable tree species mean that larger quantities of wood of better quality can be expected in the long term.

This is likely to be reflected in the cost of purchasing the forest, especially if the seller has had the forest valued by an appraiser. Regardless of the quality of the soil, its location is a decisive criterion for price formation. So it depends a lot on where the forest is located. A forest area near Munich will therefore cost significantly more than a similar one in the countryside in Saxony-Anhalt. The standard land value is derived from the average price of areas sold in the area and, in addition to the special features of the forest area offered, serves as an aid to determining the actual value.

If the forest is well cared for and there is already a lot of high-quality wood to be expected on the area initially, then you should also expect higher costs. In any calculation, bear in mind that there are usually additional costs for managing the forest. So you cannot count the expected cubic meters of harvest one-to-one with the wood prices and use this to conclude the profit. If the area is difficult to access, the wood harvest is also time-consuming. If it is a particularly protected forest, for example in a nature reserve, then management is only possible to a limited extent. The ideal value of these forest areas is all the higher for one or the other, especially if rare animal and plant species live in this forest. You should therefore be clear about your goals in advance and only acquire forest if it fits your previously set goals.

In addition, a forest rating process should include a step in order to check any “contaminated sites”. For example, if the forest is on a former military site, the trees there may have been damaged or the ammunition in the ground has to be laboriously cleared.

All closed-end forestry fund investments have one risk factor: the long contract term. Even with sustainable forestry investments which respect human rights and the environment, the planted trees need lots of time to grow. On ecologically farmed land, they probably take even longer to grow than the fast-growing trees in monocultures, which are harvested earlier, to produce cheap pulp and biomass. During long contract terms, much can happen: companies can fall victim to mismanagement or go bankrupt, the regions in which the forests grow can become politically unstable.

Natural events such as fire, earthquakes, droughts or floods also have a lot of time to occur over the years.

Forestry investment are therefore right for investors in particular if they do not shy away from risks, have the necessary financial means and staying power until the trees generate returns. If you take over a neglected forest that does not promise stability and is therefore susceptible to pests or storms, that does not necessarily mean that it is a bad deal. Careless forest care can have a positive impact on the purchase price and there may be a lot of potential in your future forest. An unkempt forest can be a deterrent, but it is up to the investor to shape and maintain the forest. What possibilities are opening up in the forest and what additional costs have to be reckoned with for any maintenance measures? With almost every intervention in the forest, whether in well-tended or unkempt forests, financial resources are necessary.

Some native tree species have been planted in the wrong locations in the past. This can result in poor growth, instability and increased susceptibility to damage. To select tree species that are appropriate to the location requires a lot of expertise. To increase the stability of a forest and make it fit for the next centuries requires a forestry rating first.

Ecological goals or enjoying forest ownership are important motives for some investors. Because while it has a personal value for some, only the regularly generated income plays a role for others. However, if one compares direct forest investments with other investment options such as stocks, then short-term gains are generally not to be expected. Every rating approach for direct forest ownership has to take this into account. Forest ratings are possibly the ratings with the longest time horizon. Long-term bond ratings – for comparison – usually only refer to a forecast period of four to five years.

Forests give us the sustainable resource wood, which will also be of ever greater importance in the coming generations.

That makes the forest relatively stable as a system. However, for a fast growing return, other investment methods are a better alternative. So buying a forest is a decision that should be made not only for financial reasons, but also for a certain amount of idealism and enjoyment of nature. Forest investors are similar to investors who invest for ethical, ecological or social reasons.

Forest has been in great demand in Germany for a number of years and has often been family-owned for generations. In addition to the forest exchange, there are a few other real estate portals and tender platforms on the Internet that also offer forest. Depending on the respective provider, there may be costs for registration or an application. In some cases, brokers are also placed between the buyer and seller from the outset.

A responsible forest office or an auction houses in the area, the member newspapers of forest owners’ associations for forest pieces on offer or the advertising section of the regional newspapers might provide information on forest for sale. With currently estimated 1.9 million forest owners in Germany, investors are also well advised to ask around in their private or professional environment. The chance that you have forest owners in your circle of friends is quite high.

unrecognizable multiethnic friends in masks standing in subway train

FFP2 Masks Tested


The rating of the ffp2 masks by Stiftung Warentest needs repair.

Stiftung Warentest is a foundation established in 1964 by the German federal parliament with the aim of helping consumers by providing impartial and objective information based on the results of comparative investigations of goods and services.

The organization buys products anonymously from retailers, and make covert use of services, carries out tests in independent labs that use scientific methods and follow their specifications and give verdicts ranging from „very good“ to „unsatisfactory“, based solely on objective results. The findings are published free of adverts in their magazines „test“ and „Finanztest“, and online at www.test.de.

A lot of time has passed since the 1960s and conditions have changed. For consumers, many more products and providers are relevant today than they were in the 1960s, as these are easy to find on the Internet. This makes it difficult for an organization “Stiftung Warentest” to keep track of all relevant products.

An example of this is the test of FFP2 masks that was published at the end of February. The test organization set up by the German Bundestag ignores precisely those masks that were the first to be tested by TÜV Rheinland from German production. If you are looking for the test results for the masks from the STOLFIG.SHOP, you will not find what you are looking for.

faceless woman with bull skull in countryside

Resistance of the Gallic Village

Read, Systems

France and Germany are still a long way from having an efficient social credit system.

One of the many prerequisites for a functioning social credit system is the abolition of cash, because only electronic money would allow the state to exercise complete control over all transactions of the citizens. But this control is in turn necessary to enforce the results desired by a social credit system.

The argument for a cashless society has been around for a while, but the rapid rise of the Coronavirus crisis has intensified the debate again amid concerns about banknotes and coins transmitting the virus. In addition to this, the increasing decline of high street bank branches and ATMs has made the possibility of a cashless society in the next few years more likely than ever before.

Interested in financial transactions, MoneyTransfers.com analysed the latest data from YouGov, to discover which countries in the world would most be in favour of a cashless society. A total of 25,823 individuals were surveyed for the research, 2,049 from Germany.

India is in number one spot as an overwhelming 79% of Indians would like to have a cashless society in their country. In second position is Malaysia, where 65% of Malaysians are in support of having a cashless society in their country. The United Arab Emirates (UAE) and Indonesia are in joint third place, as 63% of citizens in each respective country believe becoming cashless will have a positive impact on their society and economy. Vietnam (60%) and Singapore (56%) are among the other countries where over 55% of citizens are in favour of transitioning towards a cashless society, respectively in fourth and fifth position.

Germany is in 16th place, as 20% of Germans think going entirely cash free would be a great decision for their country. Furthermore, 35% of Germans admit to paying in cash less often since the Covid-19 outbreak.

At the other end in 17th position is France, where only 18% of French citizens would welcome their country being entirely dependent on electronic forms of payment.

multiracial women going out from university

Light Masks for Easier Breathing


Masks are also an issue for psychologists.

Who would have thought in 2019 that face masks could one day become an issue for risk managers? The far-reaching consequences give reason to be precisely informed about the use of face masks.

The protective effect of the FFP2 mask is only guaranteed if it is worn continuously and tightly (i.e. to match the shape of the face and finally on the skin). As part of occupational safety, the tight fit of the mask is ensured by the so-called FIT test.

If FFP2 masks are used correctly, there is increased breathing resistance, which makes breathing difficult. For this reason, an occupational health check-up should be offered before wearing in order to medically assess the risks for the user on an individual basis. In accordance with the requirements of occupational safety, the continuous wearing time of FFP2 masks is limited in healthy people. This minimizes the worker’s stress due to the increased breathing resistance. Light masks give the wearer the subjective feeling of being able to breathe better.

FFP2 masks have so far been used for a specific purpose and in a targeted manner in the context of occupational safety. Therefore, outside of the health care system, studies would have to be carried out on the health, possibly also long-term effects of their use (e.g. in risk groups or children). In studies with health workers, side effects such as breathing difficulties or facial dermatitis as a result of the final tight fit have been described. FFP2 masks should not be used multiple times as intended, as they are usually single-use products.

The IC Rating™ Model by Intellectual Capital Sweden

Definitions, Models, Read, Systems

Intellectual Capital comprises all factors critical to an organization’s future success that are not shown in the traditional balance sheet.

If you are looking for a rating approach to intellectual capital (IC) that fits that definition, this article is still the right read for you:

The IC Rating™ model by Intellectual Capital Sweden
Kristine Jacobsen, Peder Hofman‐Bang, Reidar Nordby Jr
Journal of Intellectual Capital
ISSN: 1469-1930
Publication date: 1 December 2005 

The Intellectual Capital model is originally based on ideas put forth by Sveiby (1997) indicating a division in internal, external and market assets, and the groundbreaking work done by Leif Edvinsson at Skandia in the beginning of the 1990s (Edvinsson and Malone, 1997). Most IC models today use this division, but the words and details might vary. The IC Rating™ model provides important inspiration for investors who are interested in impact investing, social investing and sustainability.

The IC Rating model contains three main areas of IC:

  • organizational structural capital,
  • human capital and
  • relational structural capital.

The value of the article is, among other things, that it develops a taxonomy that is relevant today and probably also in the future. The model creates order by defining elements and showing relationships between the elements. On the one hand, these are abstract enough to be generally valid, on the other hand, concrete enough to lead to a practical result.

The reader of the article will understand why a company’s intellectual capital is not just the sum of the knowledge of its employees. Instead, it is key to capture that knowledge in the company’s structures, so it is transferred from individuals, to groups, to the entire organization and becomes part of the organization’s “structural” capital.

The IC Rating™ gives the company a better understanding of non-financial assets and their importance in the company’s value creation. Intangible assets behave differently to financial and monetary assets, and should therefore be treated differently. The rating brings new insights into how businesses change and perform and how intangibles interact to create value.

The taxonomy provides for a shared language and terminology, therefore assuring a structured and pedagogical way of discussing and understanding a concept that is often perceived as blurry and unclear. A better internal management of IC and translation of a business strategy into actionable results are the consequences. As with any meaningful asset rating it helps the management make intelligent trade-off decisions with regards to investments. Companies never have unlimited funds to invest in the company and the results of an IC Rating™ will give clear indications where the investments will give the best return.

person dropping paper on box

Countercyclical Capital Buffer in the Election Year


To avoid speculation about the state of banks and the economy in the election year, there are no more capital adjustments.

Bank capital should be accumulated when cyclical systemic risk is judged to be increasing, creating buffers that increase the resilience of the banking sector during periods of stress when losses materialise. Since the decision on the formation of equity capital is not left to the banks themselves, but is controlled by the German Federal Financial Supervisory Authority (BaFin), the decisions of BaFin are of high political importance and symbolism.

The countercyclical capital buffer (CCyB) is set every quarter by BaFin which takes into account recommendations of the AFS Financial Stability Committee and the European Systemic Risk Committee (ESRB) when making its decision. The CCyB is part of a set of macroprudential instruments, designed to help counter pro-cyclicality in the financial system.

Unfortunately, these measures themselves have a pro-cyclical effect. The capital requirements and their changes are themselves signals for the market. Exaggerated reactions on the part of market participants are possible, both in the event of easing as well as increased capital requirements.

In response to the corona pandemic, BaFin lowered the CCyB from 0.25 percent to 0 percent in April 2020 and has kept it there ever since. The amount BaFin will set the countercyclical capital buffer after the corona pandemic will largely depend on how the cyclical vulnerabilities and risks in the banking sector develop, writes BaFin: “It is currently not foreseeable when the pandemic will be over.”

In contrast, it is possible to predict when the general election in Germany will take place. The Federal Ministry of Finance is responsible for BaFin. Although being member of only the third strongest party in the German Bundestag, the Federal Minister of Finance is entering the election campaign as a candidate for Chancellor and the top candidate of the Social Democratic Party.

Subscribe to get access

Read more of this content when you subscribe today.

BaFin’s decision shall help maintain the supply of credit and dampen the downswing of the financial cycle. The CCyB can also help dampen excessive credit growth during the upswing of the financial cycle. BaFin’s decision may therefore not reflect economic realities, but rather the need to keep the issue of the fragility of the economy and the vulnerability of banks out of the election campaign. Normally a quarterly review of the decision would be undertaken.

GRENKE Informs About Fruits of BaFin’s Special Auditor


Based on an ad hoc announcement, Grenke AG called this morning for a media conference that was scheduled at short notice.

Due to the severe crisis of the company and the still good ratings, the development is receiving special attention. The questions discussed included possible personnel changes on the Executive Board. The interviewed Antje Leminsky, Chair of the Board of Directors of GRENKE AG, and her CFO referred to the Supervisory Board. This corresponds to stock corporation law in Germany and is a normal process.

At the same time, however, it must be stated that the board of directors does not give any hope that the founder of the company, Wolfgang Grenke, might rejoin the company to ensure orderly conditions. Wolfgang Grenke turned 70 on February 3, 2021. If you follow the example of American presidents, it is not yet an age to leave the fate of your life’s work entirely to the younger generation. Therefore it would have been an important signal that the company’s board of directors could be certain of the support of the founder.

Wolfgang Grenke’s personal financial situation is certainly so secure that in a financial sense the development of the company he founded is no longer important for him personally. The following diagram shows eight important holdings by Wolfgang Grenke. His company shares range from 20% to 79.53%. Each of these companies in turn has shares in other companies, sometimes together with companies in which Wolfgang Grenke also holds shares:

Subscribe to get access

Read more of this content when you subscribe today.

Mazars’ interim report

According to Mazars’ interim report, no findings have been made that cast doubt on the legal validity and economic substance of the lease contracts with outstanding receivables of around EUR 5.6 billion. According to the report, the allegation of money laundering has also not been confirmed. Generally, there is no systematic need for goodwill impairments on acquired franchises. According to the report, the valuations are justifiable despite methodological deficiencies.

Mazars’ report also contains significant points of criticism. For example, Mazars considers it necessary to consolidate the franchise companies. The report also criticised the failure to disclose related parties in previous annual financial statements, the procedure of parts of GRENKE Bank’s customer lending business, and the money laundering prevention process. The report also contains the already known findings in the areas of internal audit and compliance.

APIs Allow Next Generation Financial Services


Application programming interfaces—or APIs—have already had a fundamental impact on the digital banking industry by creating grounds for an array of new financial products.

According to Marius Galdikas, CEO at ConnectPay, APIs can help further improve financial services, as they create the opportunity to ensure coherent multi-channel services and introduce personalized experiences, fostering repeat usage.

In the payments industry, an API is an intermediary which enables to securely transfer account data between payment service providers (PSPs) and third parties. It is an essential part of open banking, a concept based on open, yet secure access to financial information with the end goal of creating better products for consumers.

According to M. Galdikas, APIs are at the heart of any forward-thinking financial technology company focused on driving innovation. He outlined one example of how APIs can support online businesses to refine the customer experience.

“One crucial consideration for businesses is the consistency at which the services they provide are offered across different digital channels: ‘does it offer the same efficiency, speed, or transparency?’ Ensuring a coherent multi-channel experience may very well be the thing that gives the company that competitive edge. This coherence can be achieved by correctly utilizing APIs – a responsibility that falls upon the payment service provider supporting the business,” explained Galdikas.

“An API is the main element that allows a company to isolate services into something granular and adapt it, with ease, to different channels and platforms. For example, you can easily customize specific elements for different channels, thus creating a more personalized experience for the user, based on the devices used to access the service,” said Galdikas.

M. Galdikas noted that ConnectPay is also looking to utilize APIs by launching a new payment initiation service for their EU-residing merchant customers. The solution will enable them to securely collect funds from their customers’ bank accounts. For this matter, the company is teaming up with Sensedia – experts in managing complex API ecosystems. Outsourcing an API provider gives more room to focus on innovation, as more resources can be diverted towards the product, instead of building the system from the ground up.

Who Used RATING.REPAIR in 2020?

Read, Repairs

Map of RATING©REPAIR users in 2020

We do not know whether it is mere curiosity, serves scientific research or is of commercial use; in any case, we are repeatedly asked who the users of our service RATING©REPAIR are. We are therefore providing an overview of the user structure in 2020.

We only receive this information to the extent that visitors to our website also allow cookies to be set or subscribe. We therefore have no information on who has only visited our website but not used it. Furthermore, it does not record who only reads our freely available blog posts. In addition, these are also published on Twitter, LinkedIn, Facebook and TumblR. Therefore we have many more readers than users. So we are only talking about users in a narrower sense.

The world map shows from which countries we were able to serve users with RATING©REPAIR in 2020. As expected, most of the interested parties are in Germany, where RATING EVIDENCE GmbH is based in Frankfurt am Main. The darker the color, the greater the number of users.

Click here to see a list of the countries of our RATING©REPAIR users 2020

Ranking according to the number of visitors in 2020:

United States
United Kingdom
Hong Kong SAR China
Bonia & Herzegovina
South Africa
United Arab Emirates
Czech Republic
South Korea
New Zealand
American Samoa

In the first two months of 2021, we noticed that users from other countries that are not yet on this list above have joined the list now.

At the beginning of 2021, the user structure led to the following structure of our revenues, which were achieved exclusively through the sale of subscriptions:

RATING EVIDENCE GmbH generates additional sales from investments and other businesses that are not included in this chart. Due to the lifetime price guarantee and the guarantee to all subscribers not to lower prices for later subscribers, there was a slight increase in the average subscription fee over the last year. As a result, around a third is generated in Germany, a third in the countries of the European Union outside Germany and a third in countries outside the European Union.

We see a shift in user structures from month to month, depending on the topics we are dealing with. There was a clear jump in the number of users from China when our book “Social Credit Rating” was about to be published last year and announcements as well as excerpts from the articles could be put on our website.

waving flag of united states of america

In 2020 we installed a translation function from Google Translate on our website, which enabled a quick translation into almost all major languages in the world with just one click of the mouse. Although we do not know exactly how often this offer was used by our users, we have abolished the translation function. Therefore, no more data is passed on to Google Translate. On the one hand, many browsers automatically offer a translation if the visited website does not appear in the language preset in the browser. On the other hand, everything indicates that our users always speak English. Anyone who deals with the responsible and efficient allocation of capital as a resource and with the rating of all asset classes around the world obviously understands enough English.

"During a medical routine check-up my doctor once gave the - for me unknown - name of an illness to me and asked me if I might be infected with this illness. I then asked the doctor what the disease name meant and what the disease was all about. The doctor replied that I had already answered his question by asking him about this disease instead of giving him an answer right away. 'Anyone', he said, 'who has the disease that they have been asked about definitely knows that they suffer from it and would not hesitate a second to say yes.' It is similar with our services from RATING EVIDENCE GmbH. Those who don't know what we can do may not suffer or may not suffer enough to see the value of our services on RATING©REPAIR. Get in touch with us if you are the one who understands what I mean."

 Dr. Oliver Everling, CEO of RATING EVIDENCE GmbH
carnival mask decorated with pink flower

Whistleblowing Is Getting Popular

Read, Whistleblowing

Whistleblowers, i.e. mostly anonymous tipsters who report irregularities to supervised companies, dubious providers or market practices, have developed into an important source of information for the Austrian Financial Market Authority (FMA).

In 2020, 278 reports were submitted via the whistleblower platform on the FMA website, a new record since the system was introduced in 2014, and an increase of 57% in the past five years alone. Around nine out of ten reports prove to be relevant for supervision. Of the 245 reports that actually affected the FMA’s area of ​​responsibility, around half related to investment fraud (120) and unauthorized business operations (9), i.e. the provision of financial services requiring a license without the required authorization. Almost a third (77 reports) suspected misconduct at banks, only four concerned insurance companies and pension funds. 19 related to the securities business, 15 related to suspected money laundering.

“Our web-based whistleblower platform guarantees whistleblowers technically absolute anonymity. The information is encrypted cryptographically, so it is not possible for us or for the law enforcement authorities to technically identify the informant, “said the FMA Board of Directors, Helmut Ettl and Eduard Müller:” This creates trust and security, and is one of the main reasons why this information channel is becoming more and more popular. ”At the same time, an anonymized, equally secured mailbox enables communication between the authorities and the whistleblower, if they allow it.”

“Our whistleblower platform is such an important – often preventive – instrument in the fight against investment fraud and dubious market practices. Abuses can often be recognized early, and damage can be limited or completely prevented. It makes a valuable contribution to protecting consumers, investors and creditors,” wrote Ettl and Müller.

Two thirds of the indications of investment fraud already concern offers in connection with crypto assets and so-called virtual currencies, with sales being carried out via dubious or criminal online trading platforms on the Internet, and advertising is often via social media such as Facebook, WhatsApp, TikTok or Telegram. In addition to the distribution of fraudulent crypto assets, the criminal trade in virtual currencies continues to increase. On the dubious trading platforms are in particular financial contracts for differences (CFDs), foreign currency trading (FOREX) or binary options as well as supposedly automated trading with such alleged investment products.

The offer of binary options to small investors is prohibited in the EU, that of CFDs is severely restricted by regulations. A third of the reports of investment fraud related to fraudulent offers with traditional investment products such as stocks or gold as well as various forms of advance fraud.


Whistleblower notices led to seven investor warnings, 42 reports to the public prosecutor’s office and a large number of official proceedings by the FMA as well as criminal convictions in 2020, reports FMA.

crop attractive asian woman putting on mask on street

Concerns About the Impact of COVID-19 on Credit Ratings


The board of the International Organization of Securities Commissions (IOSCO) published the Final Report “Observed Impact of COVID-19 Government Support Measures on Credit Ratings“. IOSCO is the global standard setter for securities markets regulation.

The pandemic’s economic and market turmoil led to many credit ratings downgrades and has put credit rating agencies (CRAs) and their credit ratings into greater regulatory, industry and media focus. Since March 2020, FitchRatings, Moody’s, and Standard & Poor’s (S&P) have together issued over 20,000 credit downgrades across varying asset categories and jurisdictions.

IOSCO’s review shows that the CRAs considered the COVID-19 related government support measures (GSMs) in their credit ratings and that GSMs had a substantial role in alleviating the downward pressure on credit ratings during 2020. “However,” writes the board of IOSCO in the report, “as the aftermath of the economic shock from the COVID-19 health crisis continues to unfold into 2021, it remains important to continue to consider the effects of the GSMs across credit ratings and credit rating methodologies.” In this regard, IOSCO concludes that the impact of GSMs on credit ratings should continue to be regularly monitored through supervisory channels.

“Ultimately, the shape of the recovery will be key to future credit rating actions. Although CRAs have indicated in public reports that they do not expect to adopt further wide-ranging reassessments of credit ratings, there remains considerable uncertainty around the future economic recovery”, fears IOSCO.

It is not only interesting what is to be read in the report. The unspoken information is just as interesting:

Subscribe to get access

Read more of this content when you subscribe today.

Online Brokerage of Mezzanine Capital for Real Estate Projects

Platforms, Read

Real estate investments are a bit like finding a life partner.

The expectations of capital seekers and investors are often far apart – and the disappointment is great when you have to move on after a hopeful commitment without having achieved anything. Along with the importance of mezzanine capital, there is also a growing desire for digitization and standardization of the placement process. Interested parties can now register on the new digital platform Mezzalite. Matching starts in spring.

Exciting insights came to light after the soft launch

In the current investment environment with very low interest rates, the allocation of mezzanine capital is increasingly in demand, especially among family offices. But the search for a partner is full of traps, time-consuming detours and often ends unsuccessfully. Rapid property development is essential from the perspective of the investor and his financier.

Painful experiences can be avoided if a standardized approach contributes to the analysis of whether the partners are “on the same wavelength”, and whether there is a good chance of establishing a professional relationship as a result. “Applied to real estate developers and investors looking for capital, this means that you can avoid many disappointments in advance with a well-digitized process,” says Georg Stampfl, Managing Director of Mezzalite GmbH.

Georg Stampfl © Mezzalite/Ivana Jovic
Georg Stampfl © Mezzalite/Ivana Jovic

During the registration phase, digital expert Stampfl and his colleagues carried out an analysis of around 100 investors and capital seekers on their new digital platform Mezzalite and found out which main reasons make it difficult to find a partner in the mezzanine capital sector.

Hurdle 1: The match has so far been a matter of chance

Getting to know investors is not easy for real estate developers. So far, according to the study, it has mainly been third-party contacts, often word of mouth, that have brought the two parties together. Media and search engines also play a role in getting to know each other. The bottom line is that searching and finding is unstructured, and matching is a matter of chance. In the end, 50 percent of the cases fail, according to the Mezzalite study, for example because the project does not fit the investment profile and / or the price expectations diverge too much.

Hurdle 2: The search is too time-consuming

Finding investors and borrowers together often takes more time than necessary. This is particularly bitter if, for example, some investors do not really listen to the capital seekers. Months of negotiations follow, only to find out in the end that the project would not have suited the investor right from the start. Some people looking for capital, on the other hand, shy away from the effort of looking for capital for smaller real estate projects, although these could also be of interest to investors.

Hurdle 3: Fear of competition makes checking seriousness more difficult

Investors expect project developers to show their track record in the first step and disclose the people involved, e.g. their own construction workers on board, external partners, banks, securities, etc. The borrower, on the other hand, acts cautiously when releasing data, after all he is faced with tough competition in which he has to protect his market position.

Hurdle 4: Complexity of the process and lack of comparability

Investors are often faced with those looking for capital who do not have a clear idea of ​​how to raise capital or what the capital providers are. The financier, on the other hand, has no way of comparing different conditions. In addition, he is confronted with a wide variety of requirements, for example from what amount a family office invests, what expectations it has in terms of security and what project presentation it would like.


For Mezzalite one thing is certain, says Georg Stampfl, co-founder of Mezzalite GmbH: the automation of the preselection and a standardization of the process for the allocation of mezzanine capital is the most important step towards the goal. The financing partners can – almost like when looking for a partner – handle almost everything digitally, from “dating” to “matching” and “monitoring” to feedback. This has enormous potential to simplify mezzanine capital transactions and reduce transaction costs. This more efficient “partner search” process lays the foundation for a trusting cooperation. After the digital match, the personal negotiations and discussions that are essential for the success of the real estate project or investment are pending.

As with the partner exchanges mentioned at the beginning, the decisive question is what quality are those who register on such a platform. In addition, the quantity is crucial – will there be enough potential partners? Ideally, quantity and quality go hand in hand.

sand relaxation luxury business

New Rating Approaches for Crypto Exchanges and Crypto Custodians

Agencies, Models, Read

It was not just Tesla’s spectacular entry into the world of bullish cryptocurrencies that attracted the attention of investors to this young asset class. Thousands of crypto currencies are now part of a universe that ranges from outright fraud to serous applications. Keeping an overview here is hardly possible for individual private investors in particular – hence a typical market situation in which rating agencies are required. Classifications by rating symbols are easy to understand and therefore reach many investors.

The need has already been recognized internationally in various countries. Correspondingly, websites like www.crypto-rating.com, which aim to give investors orientation with ratings and rankings, catch the eye among the search results. Like the cryptocurrencies, the rating agencies have also emerged from different motivations that need to be carefully considered.

Finanz Verlag GmbH is now commissioning DLC ​​Distributed Ledger Consulting GmbH to carry out crypto ratings. Initially, tests are planned with regard to crypto exchanges and crypto custodians, an expansion to other products in the digital asset environment is planned.

Two evaluations are planned for 2021

  • The first test – with a focus on crypto exchanges – is published in the investor magazine “BÖRSE ONLINE”.
  • Another test follows – with a focus on crypto custodians – in the publication “Trends in Asset Management (TiAM)”, which is aimed at professional investors.

Dieter-Thilo Fischer, Managing Director of Finanzen Verlag GmbH, explains: “Crypto assets are already on the agenda of many investors – and they almost certainly have a great future ahead of them.” Nevertheless, for many it is a “cryptic” asset class with new challenges, in which an independent source of information is particularly important. “We are therefore pleased to have gained an extremely experienced blockchain specialist consultancy for our planned ratings with DLC.”

Dr. Sven Hildebrandt, managing partner of DLC Distributed Ledger Consulting, adds: “Of course we are pleased to be able to work for such an established publisher in the financial market environment. And you certainly feel confirmed when our company’s assessment is so widely spread. We are very much aware of the responsibility that this entails. After all, over 300,000 people read the publications of the Finanzen Verlag. “

woman in black leather jacket holding microphone

The Threat of Hacktivists


Cyber risk is event risk, a risk that is growing across all sectors globally.

Digitization continues to increase, making software more pervasive throughout an organization, which in turn drives ever more complex software supply chains while attacker capabilities are growing simultaneously. “However,” writes Moody’s in a research document, “the types of cyberattackers remain essentially the same: criminals, advanced persistent threat groups backed by nation states, and socially motivated attackers known as ‘hacktivists.'”

According to its report “Sunburst attack on public and private entities raises credit risks as extent of breach unfolds”, Moody’s believes that the scale and sophistication of the Sunburst attack will trigger profound shifts around cybersecurity risk management and oversight practices for debt issuers. In terms of the objective of the Sunburst attack, cyber experts view it as an intelligence gathering exercise that targeted government agencies and private corporations.

A highly sophisticated and well-resourced adversary, likely backed by a nation-state, was able to leverage access to SolarWinds‘ internal source code, and possibly that of other software providers, to act as a conduit into a huge swath of government and industry IT systems. SolarWinds is a mid-sized enterprise software company whose Orion network management and monitoring software is used extensively by industry and government IT teams.

“The sophistication of the malicious code implanted by the Sunburst attackers passed internal quality checks,” continues Moody’s report, “allowing them to bypass authentication protocols at the conduit companies and thus gaining footing across thousands of public and private organizations. The US Cybersecurity and Infrastructure Security Agency (CISA) says the parties behind the intrusion deployed a variety of tools at their disposal to further infiltrate their victims’ networks, including password guessing and password spraying to breach its targets.”

Following the disclosure of the attack, CISA directed government and government-related entities to power down or disconnect any identified software from federal networks. This step may have exposed those entities to other risks, however, as it might have decreased visibility across their networks. CISA also issued a technical alert providing details and mitigation strategies to help network defenders take immediate action.

“The next step was to determine whether or how the organization was compromised or affected”, reflects Moody’s. “This step is ongoing and leading to the discovery of some follow-on malicious activity. While the costs of each of these actions is generally containable, the potential losses from breached networks, including severe operational issues, compromised customer data and loss of intellectual property or trade secrets, are far greater.”

crop anonymous person calculating profit on smartphone calculator near banknotes

Calculating Aggregate Risk Weight for Private Banks


Calculation of the Aggregate Risk Weight for CRR Credit Institutions Assigned to the Compensation Scheme of German Private Banks

The credit institutions under the Capital Requirements Regulation (CRR credit institutions) are obliged to secure their deposits in accordance with the German Deposit Guarantee Act by belonging to a deposit guarantee system. The following relates to Entschädigungseinrichtung deutscher Banken GmbH (EdB), the Compensation Scheme of German Private Banks.

The following information does not replace legal advice and is completely non-binding. The compilation serves only to provide a quicker introduction to this complex subject from the perspective of private banks. An unofficial translation of the Compensation Scheme Funding Regulation is provided by the Association of German Banks for information purposes only. The original German text is binding in all respects. The following is not applicable to the calculation of the aggregate risk weight for CRR credit institutions assigned to the Compensation Scheme of the Association of German Public Banks.

This applies only to CRR credit institutions within the meaning of Section 1 (3d) sentence 1 of the German Banking Act. According to Section 1 (3d) sentence 1 of the German Banking Act, CRR credit institutions are credit institutions within the meaning of Article 4 (1) number 1 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176/1 of 27 June 2013).

“The Regulation on the Funding of the Compensation Scheme of German Private Banks and the Compensation Scheme of the Association of German Public Banks” (Compensation Scheme Funding Regulation) is the “Verordnung über die Finanzierung der Entschädigungseinrichtung deutscher Banken GmbH und der Entschädigungseinrichtung des Bundesverbandes Öffentlicher Banken Deutschlands GmbH” (Entschädigungseinrichtungs-Finanzierungsverordnung, EntschFinV). This Regulation applies to the Compensation Scheme of German Private Banks and the Compensation Scheme of the Association of German Public Banks (compensation schemes), as well as CRR credit institutions within the meaning of Section 1 of the Deposit Guarantee Act that are assigned to a compensation scheme.

This Regulation sets out the further details of the funding of the compensation schemes and further provisions on the methods for calculating contributions, and the calculation and collection of contributions and payments, The following is about these rules with an eye on private banks.

Section 19(2) to (4) of the Deposit Guarantee Act

(2) Contributions to deposit guarantee schemes shall be based on the amount of covered deposits of the CRR credit institutions that are members of the deposit guarantee scheme and the degree of risk incurred by the respective CRR credit institution.

(3) A deposit guarantee scheme may, with the approval of BaFin, use its own risk-based methods to calculate the risk-based contributions. The calculation of the contributions concerned shall be proportional to the risk of the CRR credit institutions that are members of the deposit guarantee scheme and shall take due account of the risk profiles of the various business models. The own risk-based methods for calculating the contributions may also take into account the asset side of the balance sheet and risk indicators such as capital adequacy, asset quality and liquidity.

(4) Lower contributions may be provided for in the case of CRR credit institutions that belong to low-risk sectors or for members of an institutional protection scheme that is not recognised as a deposit guarantee scheme.

A CRR credit institution’s annual contribution shall be calculated in such a way that the sum of all annual contributions reaches at least a certain annual target level. The annual contribution for CRR credit institutions assigned to the Compensation Scheme of German Private Banks shall be at least 20,000 €. In addition to the annual contribution, a flatrate surcharge may be levied to cover the administrative and other costs incurred by the compensation scheme in the course of its activities. The surcharge for CRR credit institutions assigned to the Compensation Scheme of German Privat Banks shall not exceed 12,500 € plus in each case 0.5% of the CRR credit institution’s annual contribution. The surcharge shall be fixed together with the respective annual contribution and shown separately in the contribution notice. The compensation scheme may also levy a surcharge for contribution assessment years in which no annual contribution is levied.

The compensation scheme sets an annual target level in each contribution assessment year. Deposit guarantee schemes shall have adequate financial means that are proportionate to their existing and potential liabilities (available financial means). They shall put in place adequate systems to determine their potential liabilities. The deposit guarantee schemes shall ensure that, by the end of 3 July 2024, their available financial means shall at least reach a target level of 0.8% of the amount of the covered deposits. If the available financial means fall short of the target level, the deposit guarantee schemes shall ensure that the collection of contributions shall resume until the target level is reached again. If, after the target level has been reached for the first time, the available financial means have been reduced to less than two-thirds of the target level, the contributions shall be set at a level allowing the target level to be reached again within six years.

The compensation scheme may raise or lower the annual target level to reflect developments in the business cycle. When it does so, the respective phase of the business cycle and the potential impact of pro-cyclical contributions on the CRR credit institutions’ financial position shall be taken into account. The annual target level may be raised by means of a flat-rate surcharge if this appears necessary in view of a forecasted growth in covered deposits until the target level is reached.

Annual Contribution

The annual contribution shall be calculated by applying the following formula:

Ci = max. {MCi; (CR x ARWi x CDi x µ)}


Ci = annual contribution from CRR credit institution
MCi = minimum contribution of 20,000 €
CR = contribution rate
ARWi = aggregate risk weight for CRR credit institution
CDi = covered deposits of CRR credit institution
µ = adjustment coefficient

The annual contribution shall be either the minimum contribution MCi or the result of the formula CR x ARWi x CDi x µ, whichever is higher.

Contribution Rate

The contribution rate is determined on a yearly basis by dividing the annual target level by the sum of covered deposits of all CRR credit institutions as at ultimo of the preceding year. The aggregate risk weight for the CRR credit institution shall be a percentage calculated on the basis of several risk indicators.

The compensation scheme shall use the adjustment coefficient to adjust the sum of the annual contributions of all CRR credit institutions that would be produced by calculating the annual contributions on the basis of the contribution rate, the aggregate risk weight and the covered deposits of each CRR credit institution using the formula Ci = CR x ARWi x CDi (unadjusted annual contributions) to the annual target level. The adjustment coefficient shall be calculated by applying the following formula:

µ = Annual target level / Sum of unadjusted annual contributions

The compensation scheme shall be entitled to lower or raise the adjustment coefficient if this is necessary due to developments in the business cycle and the pro-cyclical impact of the annual contributions.

Credit Quality Grade

The aggregate risk weight for CRR credit institutions assigned to the Compensation Scheme of German Private Banks shall be calculated on the basis of a credit quality grade. The credit quality grade shall be based on a risk assessment of the CRR credit institution by the Compensation Scheme of German Private Banks using risk categories and risk indicators.

For each credit quality grade, the aggregate risk weight shall be as follows:

Credit Quality GradeAggregate Risk Weight
050 %
175 %
290 %
3100 %
4110 %
5125 %
6140 %
7160 %
8180 %
9200 %

By way of derogation from the above mentioned stipulations, an aggregate risk weight of 110% shall apply to newly established CRR credit institutions until and including completion of the second full financial year. In addition to paying the annual contribution, CRR credit institutions newly assigned to a compensation scheme shall be required to make a one-off payment. The one-off payment shall be 0.2% of the covered deposits held by the CRR credit institution on 31 December of the preceding year, but at least 25,000 €. The one-off payment shall be due when the notice concerning the payment has been announced.

The Compensation Scheme of German Private Banks shall base its assessment of the CRR credit institution’s risk on the following risk categories:

  1. capital,
  2. liquidity and funding,
  3. asset quality,
  4. business model and management, and
  5. potential losses for the compensation scheme.

The CRR credit institutions shall be required to confirm to the compensation scheme the factual and arithmetical accuracy of the information they report. The compensation scheme may verify the accuracy of such notification.

Obligation to Submit Documentation and Proof

CRR credit institutions shall deliver to the compensation scheme by 30 June of the respective contribution assessment year the following information and documents for calculation of the annual contribution:

  1. the annual financial statements (annual accounts) for the financial year ending before 1 March of the respective contribution assessment year and for the preceding year,
  2. notifications as regards asset encumbrance, single data point model and validation rules as at the balance sheet date of the financial year ending before 1 March of the respective contribution assessment year and as at the balance sheet date of the preceding year,
  3. the overview template for own funds, as at the balance sheet date of the financial year ending before 1 March of the respective contribution assessment year and as at the balance sheet date of the preceding year,
  4. the completed reporting template for the financial information as at the balance sheet date of the financial year ending before 1 March of the respective contribution assessment year and as at the balance sheet date of the preceding year,
  5. the completed compensation scheme questionnaire to gather additional information as at the balance sheet date of the financial year ending before 1 March of the respective contribution assessment year and as at the balance sheet date of the preceding year,
  6. the statement of assets and liabilities, together with a statement of income and expenses, and for branches of undertakings domiciled abroad the notes thereon, and
  7. for the purpose of preparing the risk assessment, all current credit ratings relating to them or the credit ratings obtained for submission to the compensation scheme.

The documents specified above must bear an unconditional audit certificate issued by the auditor. Annual financial statements or a statement of assets and liabilities bearing a conditional audit certificate shall only be taken into account by the compensation scheme if the objections made by the auditor do not relate to the risk indicators and risk categories on which the risk assessment is based.

Risk Categories and Risk Indicators

The following risk categories and risk indicators shall be incorporated into the risk assessment with the following weighting (source):

Subscribe to get access

Read more of this content when you subscribe today.

Description of the Risk Indicators

1.1 Leverage ratio in accordance with Implementing Regulation (EU) No 680/2014, template C 47.00, row 340, column 010.

1.2 Common equity Tier 1 ratio in accordance with Implementing Regulation (EU) No 680/2014, template C 03.00, row 010, column 010. If the waiver pursuant to Section 2a of the Banking Act in conjunction with Article 7 of Regulation (EU)
No 575/2013 is applied, the group-level ratio shall be used. For CRR credit institutions which are covered by the provisions of Section 53c, number 2 of the Banking Act, the ratio of the banking group shall be used.

2.1 LCR in accordance with Implementing Regulation (EU) No 680/2014, template C 76.00. If the waiver pursuant to Section 2a of the Banking Act in conjunction with Article 8 of Regulation (EU) No 575/2013 is applied, the ratio at group level shall be used.

2.2 Net stable funding ratio (NSFR). The Net Stable Funding Ratio disclosure standards published by the Basel Committee on Banking Supervision on 22 June 2015 require the mandatory disclosure of the NSFR for reporting periods after 1
January 2018. From 2019, the NSFR shall receive a weighting of 9% in accordance with Implementing Regulation (EU) No 680/2014. If the waiver pursuant to Section 2a of the Banking Act in conjunction with Article 8 of Regulation (EU)
No 575/2013 is applied, the ratio at group level shall be used.

3.1 Non-performing loans ratio in accordance with the Financial and Internal Capital Adequacy Information Regulation (Finanz- und Risikotragfähigkeitsinformationenverordnung), templates for financial information pursuant to Section 25(1), sentence 1 of the Banking Act. Delinquent loans (excluding loans for which specific loan loss provisions have been established) less collateral provided for these loans plus loans for which specificoan loss provisions have been established before the deduction of specific loan loss provisions less collateral provided for these loans proportional to the amount of total loans.

4.1 Ratio of risk-weighted assets (RWAs) to total assets RWAs: total risk exposure amount in accordance with Implementing Regulation (EU) No 680/2014,
template C 02.00, row 010, column 010. Total assets according to the annual financial statements prepared in accordance with point III. If the waiver pursuant to Section 2a of the Banking Act in conjunction with Article 7 of Regulation (EU) No 575/2013 is applied, the group-level ratio shall be used. For CRR credit institutions which are covered by the provisions of Section 53c, umber 2 of the Banking Act, the ratio of the banking group shall be used.

4.2 Return on average assets: Net income according to item 19 of the profit and loss account form in accordance with the Accounting Regulation for Credit Institutions (Kreditinstituts-Rechnungslegungsverordnung), adjusted for increases or reductions in the contingency reserves pursuant to Section 340f of the Commercial Code (Handelsgesetzbuch) and in the special reserve pursuant to Section 340g of the Commercial Code. Average total assets shall be the arithmetic mean of the total assets as reported in the annual financial statements and the total assets as reported in the annual financial statements for the year preceding the annual financial statements of the previous year.

4.3 Rating: The rating shall be based on quantitative and qualitative macroeconomic and microeconomic aspects. Assessment levels shall comprise the market environment, assets, financial and earnings situation, business model and strategy, and the corporate structure and management of the CRR credit institution. In addition, the risk situation shall be evaluated.

Basis for Calculating the Risk Indicators

The basis for calculating the risk indicators shall be the assets, financial and earnings situation of the CRR credit institution at the end of the last business year ending before 1 March of the respective contribution assessment year. The financial data shall be based on the annual financial statements of the CRR credit institution or the corresponding statement of assets and liabilities, together with a statement of income and expenses and notes.

Calculation of the Credit Quality Grade

The credit quality grade shall be calculated as follows:

  1. The risk indicators shall be calculated in accordance with column 3 of the table.
  2. The risk indicator value thus calculated shall determine the level of the individual risk score (IRS) of a risk indicator. The IRSs shall lie between 0 for “very low risk” and 100 for “very high risk”.
  3. The IRS of each risk indicator shall be multiplied by the corresponding weighting in column 2 of the table. The weighted IRSs shall be aggregated and, on the basis of the total, assigned a credit quality grade between 0 for “highest credit quality” and 9 for “lowest credit quality”.

Ratings-based Risk Assessment

Ratings-based risk assessment shall be based solely on current credit ratings issued by a recognised credit rating company in the form of full ratings with a forecast period of one year. Current credit ratings means ratings which the CRR credit institution or a third party has commissioned with respect to the creditworthiness of the CRR credit institution and are valid on 31 May of the respective contribution assessment year. Current credit ratings for CRR credit institutions within the meaning of Section 53(1), sentence 1 of the Banking Act (Kreditwesengesetz) shall also include ratings issued with respect to the creditworthiness of their undertaking abroad.

Recognised credit rating companies means companies which

  1. are registered as credit rating agencies,
  2. are certified as credit rating agencies and
  3. have at least five years’ experience as credit rating agencies performing the credit-rating of CRR credit institutions or at least ten years’ experience as credit rating agencies performing credit assessments of CRR credit institutions for deposit guarantee schemes.

The CRR credit institutions shall, on request, furnish the Compensation Scheme of German Private Banks with suitable proof that the conditions specified have been fulfilled.

The Compensation Scheme of German Private Banks shall map a rating score class to each credit assessment category used by a recognised credit rating company. The Compensation Scheme of German Private Banks publishes the mapping of the rating score classes on its website.

The CRR credit institutions shall send the Compensation Scheme of German Private Banks all the current credit ratings relating to them to enable it to perform the risk assessment. Where CRR credit institutions do not have a current rating, they shall obtain one. This does not apply to CRR credit institutions which submit all the credit ratings for their undertaking domiciled abroad if these ratings meet set requirements.


Association of German Banks – The Deposit protection scheme

Auditing Association of German Banks – Minimising the Risks in the Interest of Deposit Protection

Compensation Scheme Funding Regulation

Deutsche Bundesbank – Deposit protection in Germany

European Banking Authority – Deposit Guarantee Schemes data

Federal Financial Supervisory Authority – Questions & answers on deposit protection and investor compensation

time lapse photo of stars on night

Extended Lockdown Tensions the Spring for a Higher Jump in Sales at Vectron Systems


The listed Vectron Systems AG assumes that when the corona lockdown ends, strong demand for its products can be expected.

This is especially against the background that so far only 30 to 40 percent of the target industry, catering, have converted their till systems in accordance with the new legal regulations. This is also indicated by the relatively good sales in lockdown, although it is obvious for Vectron that these would have been significantly higher without the Corona measures. In August of last year, before the second corona lockdown became known, the company forecast within the medium-term planning that sales in 2021 would increase to around EUR 50.0 million with a simultaneous EBITDA margin of 20 percent .

With more than 225,000 installations, the listed Vectron Systems AG is one of the largest European manufacturers of POS systems. Stable hardware combined with flexible, reliable software has made Vectron the market leader for POS solutions in German-speaking countries and in Benelux in the catering and bakery sectors. Several hundred specialist retail partners sell the products internationally. Digital cloud services are offered under the brand names myVectron and bonVito. The spectrum ranges from loyalty and payment functions to online reservations and online reporting. All services are directly connected to the cash register system.

Since politicians have again extended the lockdown today and were unable to make any clear statements about the final termination of the current lockdown measures, the original planning for 2021 is increasingly fraught with uncertainty. For this reason, the company now considers it necessary to withdraw this as a precaution.

The Management Board justifies its positive assessment for the time after the lockdown with a pent-up need to catch up and with the implementation date of April 1st, 2021 for the mandatory conversion of the cash register systems to the new tax regulations. Many companies have suspended the necessary investments because of the closings, but would have to do so immediately after reopening.

Federal Finance Minister’s Speculators


Issuers must be concerned about the damage to the image of the German financial center caused by the inadequate supervision of BaFIn by the Federal Ministry of Finance.

As part of the federal administration, the Federal Financial Supervisory Authority (BaFin) in Germany is subject to the legal and technical supervision of the Federal Ministry of Finance, within the framework of which the legality and expediency of the administrative activities of BaFin is monitored. For Federal Finance Minister Olaf Scholz, details from his area of ​​responsibility will come to light in the election year 2021.

Employee transactions with stocks or derivative instruments that are related to Wirecard were examined. To this end, all employee transactions reported by employees in the high risk category A between January 1, 2018 and September 30, 2020 were evaluated. The number of transactions which were not reported by the employees of BaFin is not provided. The numbers therefore only relate to those employee transactions that were also displayed by them.

According to the BaFin, the evaluation showed that 510 of the employee transactions reported in the above period were related to Wirecard. 344 deals were stocks and 166 were derivative instruments. This business was done by 85 employees.

The figures suggest an astonishingly high level of financial activity by BaFin employees in their own interests. Obviously, in the federal agency monitored by Olaf Scholz’ Federal Ministry of Finance, self-interest in conducting lucrative speculative transactions has a high priority. In particular, investing in derivative instruments, which BaFin employees around Olaf Scholz (SPD) make active use of, require a large amount of time to monitor issuers and market developments in order to be successful. However, such a high number of these transactions was detected.

The BaFin had to admit anomalies, even about insider trading. According to the special audit, the person concerned was not able to access inside information about their business as intended, i.e. within the scope of their duties. However, she did the deal after the inside information was available in her organizational unit. Because of this and due to other special circumstances, it cannot be ruled out that the person was aware of the inside information. The suspicion of insider trading is therefore in the room and must be clarified further. The BaFin therefore initiated official and personnel law steps and filed a complaint with the responsible public prosecutor’s office.

Subscribe to get access

Read more of this content when you subscribe today.

pie graph illustration

Grenke’s Supervisory Board Goes Into Detail

Read, Reviews

S&P’s Issuer Credit Rating of Grenke AG

Rating TypeRatingLast Review DateCredit Watch/ OutlookCredit Watch/ Outlook Date
Local Currency LTBBB+10-Dec-2020Negative10-Dec-2020
Local Currency STA-210-Dec-2020NM10-Dec-2020
Foreign Currency LTBBB+10-Dec-2020Negative10-Dec-2020
Foreign Currency STA-210-Dec-2020NM10-Dec-2020

“We have heard your call for more transparency regarding the resignation of our Board of Directors member, Mark Kindermann, loud and clear and would like to respond to it in detail”, writes Prof. Dr. Ernst-Moritz Lipp, Chairman of the Supervisory Board of GRENKE AG to “GRENKE investors”.

The alleged Grenke scandal has so far had little impact on the ratings. In its latest analysis, dated December 11, 2020 the rating agency Standard & Poor’s affirmed the Group’s counterparty credit rating BBB+ / A-2. S&P’s outlook on the long term rating is negative. With the 8th of October 2020, GBB Rating has confirmed the A-Rating but changed the outlook from “stable” to “negative” because of the current situation, says GRENKE on its website.

According to § 111 German Stock Corporation Act (Aktiengesetz, AktG), the supervisory board is to supervise the management board. The supervisory board may inspect and audit the books and records of the company as well as its assets, particularly the company’s cash and the inventory of securities and goods. It may also instruct individual members to perform these tasks, or may commission special experts for certain tasks. The supervisory board shall instruct the auditor of the annual accounts to audit the annual accounts and consolidated financial statements pursuant to section 290 of the Commercial Code (HGB). Moreover, the supervisory board may instruct that an external audit be performed of the substance of the non-financial statement or of the separate non-financial report (section 289b of the Commercial Code), or of the consolidated non-financial statement or the separate consolidated non-financial report (section 315b of the Commercial Code).

The Federal Financial Supervisory Authority’s (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) criticism of Internal Audit and Compliance processes in the course of the ongoing audits by Mazars was the imminent reason for Mark Kindermann’s resignation. In the course of the ongoing audits by KPMG and Mazars, there had already been some qualitative indications and findings regarding the Internal Audit and Compliance organisation.

According to Ernst-Moritz Lipp, BaFin’s criticisms related to

  • the quality of working papers,
  • the ability of the Board of Directors to discard identified deficiencies,
  • to the fact that Internal Audit did not initiate its own investigation into the Viceroy allegations,
  • the quantitative staffing of Internal Audit, and
  • to Internal Audit’s restricted access to certain company confidential information until the beginning of 2020,
  • procedural weaknesses in the documentation of related parties at the Compliance function,
  • insufficient traceability of updates to the Compliance manual,
  • questions about the metrics for assessing compliance risks,
  • insufficient documentation of the Compliance function’s written annual reports, and, again,
  • inadequate staffing of the Compliance function.

The Supervisory Board, reports its Chairman, discussed the points of criticism and possible consequences with Mark Kindermann after his deadline to submit comments had expired. As a result, Mark Kindermann resigned.

“The uncertainty that has prevailed since September is weighing heavily on our stock and bonds”, admits Ernst-Moritz Lipp. ” The audits are also requiring considerable management and personnel capacities from the company. It is a top priority for the company that we continue and conclude the ongoing audits swiftly. Naturally, we are consistently addressing the findings of the audits and further refining the processes.”

The Chairman of the Supervisory Board of GRENKE AG reports on what has already been done in recent months: “Last October, for example, we transferred the Internal Audit function from Mark Kindermann to CEO Antje Leminsky, and at the beginning of 2021 we transferred the Compliance function to Isabel Rösler, our new Chief Risk Officer (CRO). In addition, suitably qualified personnel are being sought for both Internal Audit and Compliance, because we want to expand the workforce in the short term.”

In the German two-tier board system there is an executive board (all executive directors) and a separate supervisory board (all non-executive directors). The chairman of the supervisory board is the equivalent of the chairman of a single-tier board, while the chairman of the management board is reckoned as the company’s CEO or managing director. These positions are almost always held by separate people. According to Aktiengesetz, supervisory board oversees and appoints the members of the management board and must approve major business decisions. The supervisory board, in theory, is intended to provide a monitoring role. The question therefore arises as to whether the line between supervision and management has already been exceeded at Grenke.

“Since December,” writes Ernst-Moritz Lipp to Grenke investors, “we have been working with an independent consulting firm to review the processes for Internal Audit and Compliance and further develop both areas.”

“Further,” writes Ernst-Moritz Lipp, “the Supervisory Board has decided to reallocate Mark Kindermann’s remaining responsibilities as follows: Antje Leminsky, Chairwoman of the Board of Directors, will assume responsibility for Human Resources. Isabel Rösler will also take over key administrative functions in the back office with immediate effect. Sebastian Hirsch, who was appointed Chief Financial Officer (CFO) in October 2020, will additionally be given responsibility for Group Accounting. This step would have been taken anyway after the publication of the annual financial statements and has now been brought forward.” The statements made by the chairman of the supervisory board give an idea of the extent to which the supervisory board itself has assumed control and thus responsibility.

“We also understand that you have further questions and in particular would like to know when the audits will be completed.” As the timetable is largely determined by the auditors, Ernst-Moritz Lipp admits that he is currently unable to make any binding statements on this matter. According to Section 111 (6) AktG the members of the supervisory board may not have others perform the tasks incumbent on them.

According to Section 111 (4) AktG the measures to be taken by the management may not be transferred to the supervisory board. However, certain types of business transactions might only be implemented with the supervisory board’s consent. Where the supervisory board refuses to grant such consent, the management board may demand that the general meeting adopt a resolution concerning such consent.

man in white dress shirt sitting on chair

Religious Affiliation and Politics


Religious ties are a major cause of conflict.

For example, while the leadership in the People’s Republic of China has hardly any institutional ties to religions, almost all presidents in the USA are religious. This results in conflicts of interest that can have different meanings depending on the religious affiliation.

A look at past presidents’ religious affiliations shows a broad mix of different Christian denominations.

Infographic: Religious Affiliation of Past Presidents | Statista

You will find more infographics at Statista.

With Joe Biden’s inauguration as the 46th president of the United States, he becomes just the second Catholic ever to hold the highest office in the land – joining John F. Kennedy. The Catholic Church, sometimes referred to as the Roman Catholic Church, is the largest Christian church, with approximately 1.3 billion baptised Catholics worldwide as of 2018. Hence the question arises whether the Pope will have greater influence under the new administration.

International agreements are important that foster mutual trust and enable the Catholic Church to cooperate more effectively in the spiritual and social well-being of countries. In this regard, On 22 October 2020, the Holy See and the People’s Republic of China agreed to extend for another two years the Provisional Agreement regarding the Appointment of Bishops in China, signed in Beijing in 2018. The agreement is essentially pastoral in nature, and the Holy See expressed his confidence that the process can be pursued in a spirit of mutual respect and trust, and thus further contribute to the resolution of questions of common interest.

According to data collected by the Pew Research Center, among past presidents, the Episcopal Church has had the most members hold the office of president over the past 232 years. The Episcopal Church (TEC) is a member church of the worldwide Anglican Communion and is based in the United States with additional dioceses elsewhere. Starting with George Washington, there have been 11 Episcopalian presidents out of the 46 that have held office, with other notable Episcopal presidents being James Madison, Franklin D. Roosevelt and George H.W. Bush. TEC has its origins in the Church of England in the American colonies, and it stresses continuity with the early universal Western Church and claims to maintain apostolic succession (though the Catholic and Orthodox churches do not recognize this claim).

Presbyterians are the next most common with 8 presidents, notably Andrew Jackson, Woodrow Wilson and Ronald Reagan. Presbyterianism is a part of the Reformed tradition within Protestantism, which traces its origins to Great Britain, specifically Scotland. Baptists, Unitarians and general Christians were tied with four apiece, with other smaller denominations rounding out the religious tree.

Equifax Acquires AccountScoreC


Facilitated by the acquisition of AccountScore, Equifax enhances its consumer and commercial product offerings, combining traditional credit bureau information held by Equifax with bank transaction data.

Regulatory approval for the acquisition has been received from the United Kingdom’s Financial Conduct Authority (FCA). Integration of these new data assets will enable Equifax clients to benefit from higher rates of automated, digital income verification, to carry out more granular assessments of affordability and expenditure and offer more predictive and inclusive credit scoring, by using the most up-to-date information available.

For consumers, this combined data approach will improve an individual’s ability to demonstrate their creditworthiness by enabling information that isn’t currently used to be taken into consideration. This approach enables financial inclusion for those with ‘thin’ credit files, increasing their potential access to credit at a time of great financial uncertainty.

According to Patricio Remon, President of Europe at Equifax, AccountScore is a pioneering company with a proven track record of building innovative Open Banking platforms. He says, “this signals our commitment to continuously evolve and embrace strategic innovation to support our clients’ digital transformation, and will bring many benefits for their customers.”

“More than 2.5m UK consumers and businesses now use Open Banking-enabled products to manage their finances, access credit and make payments. This growth is helping to empower a generation of consumers, giving them more control over their own financial information, offering them greater access to a wider range of financial products and making it much easier to complete simple digital applications.”

“AccountScore and Equifax have an established and successful partnership, having collaborated on a number of products and offerings over the last two years,” said Emma Steeley, CEO at AccountScore. “This acquisition allows AccountScore to accelerate its growth and reach new customers, backed by a powerful global company.”

German Communities Demand Good Social Credit Rating When Buying Land

Read, Scores

The allocation guideline for the allocation of community-owned building plots in the development plan area “South of Adolf-Reichwein-Strasse” in the Rodenbach community provides an example of applied social credit rating in Germany.

As part of the reallocation process, the municipality of Rodenbach acquires areas to implement the objectives pursued with the land-use planning. The municipal council of the municipality of Rodenbach resolved the following guidelines for the allocation of building sites with a view to a socially and urban-planning sensible building and land policy. The aim is to cover the housing needs of population groups with special housing supply problems, as well as the housing needs of the local population. The priorities are set under a socialist majority in the local council and with an SPD mayor for a family-friendly and sustainable development.

The developer has been entrusted with the development of the building area ‘south of Adolf-Reichwein-Straße’ and thus also with the sale of the building plots. The construction sites are to be allocated according to social criteria and with local residents, taking into account compliance with EU law. The award procedure for the building sites that are owned by the municipality of Rodenbach after completion of the reallocation procedure is regulated by the following award guideline, which comprises a specific rating system.

Rodenbach is a municipality in the Main-Kinzig district, in Hesse, Germany. It is situated on the river Kinzig, 8 km east of Hanau. Rodenbach is located about 20 kilometers east of Frankfurt am Main on the edge of the Vorspessart and is largely surrounded by forest, which is part of the Hessian Spessart Nature Park. Both districts are located on the stream of the same name, which is called the Lache in its lower reaches. It flows southwest of Rodenbach through the Bulau and there flows into the Kinzig, which flows north past Rodenbach towards Hanau. The next larger city next to Hanau is Langenselbold. The topographically highest point of the municipality marker is at about 245 m above sea level.

So-called “local residents’ models”, taking into account the basic right to freedom of movement, shall enable lower-income and less well-off residents to acquire adequate housing in their home municipality. In this way, an intact socially and demographically balanced population structure and social cohesion in the community should be preserved.

The following criteria are used in the specific case of Rodenbach and give an example of socialism in Germany. The following criteria are believed to ensure fair and traceable allocation of the properties:

  1. Applicants’ need according to social criteria such as number of children, relatives in need of care,
  2. Applicants’ need for income,
  3. Exercising an honorary position,
  4. Applicants’ reference to the municipality of Rodenbach, taking into account the length of time their main residence, employment / business practice.

The municipality board is authorized to allocate part of the land in a direct procedure, provided there is a public interest (e.g. doctors, pharmacists).

The building site applicant list is the basis for awarding building plots according to a point system.

Requirements for an Application

In the award procedure, the applications of the persons are considered who are entitled to apply according to the criteria listed here and who can prove the correctness of the information if required by submitting appropriate evidence upon request. Information that cannot be verified cannot be taken into account.
It is expressly pointed out that all information provided by the applicant must be correct and complete. This must be confirmed with a signature when applying. Incorrect or incomplete information can lead to exclusion from the award procedure or, after the award decision, to reversal.

  1. Asset limit: Applicants may have a maximum of assets equal to the value of the property. Applicants are not allowed to own a plot of land that can be built or a property in the municipality of Rodenbach. Real estate property outside the municipality of Rodenbach, on the other hand, is counted as assets, but is not an exclusion criterion.
  2. Upper income limit: Applicants may earn a maximum income (total amount of income) as an average according to the tax assessments of the last three years, taking into account the average nationwide annual income. The following income limits must not be exceeded: Individual € 51,000, couple € 102,000. If the acquisition is made as a couple, the calculation is based on the added income in relation to twice the average income. A tax exemption of € 7,000 per dependent child must be added to the upper limit.
  3. Applicants must be of legal age with unlimited legal capacity at the time of application.
  4. Applicants must meet the requirements listed in the procurement guidelines.
  5. Only one application will be considered per household: Only one property application can be submitted per couple, family, registered partnership, cohabiting community, cohabiting community or single parent.
  6. Applicants undertake to acquire the property in their own name. Applicants must also be the contractual partner or purchaser in the sales contract. A transfer of the property to third parties (also within the relatives) is excluded.

Award criteria

The eligible applications will be evaluated according to the following award criteria and the point system. The amount of points achieved is decisive here. A ranking list will be created. The higher the number of points, the further up the ranking is. If the points are equal, then chance decides.

Social Credit Rating system

The land is awarded by the municipality board. For each applicant a score is calculated. The following point system is used:

Subscribe to get access

Read more of this content when you subscribe today.

General terms and conditions

  1. The purchase process takes place on the basis of a uniform standard purchase contract.
  2. As the seller, the municipality of Rodenbach will appoint the notary’s office.
  3. If the applicant confirms in writing within eight weeks, a notification is sent to the notary to set a date for the notarization. The purchase agreement must be notarized within a period of 3 months after the decision.
  4. If a purchase contract does not come into existence, plots that become available again are offered individually to successors in accordance with the order of criteria.
  5. It is assumed that the intended construction project can be financed by the applicants. A current confirmation of financing must be submitted with the application.
  6. 30% of the purchase price is due upon certification, 70% of the purchase price upon completion of the development (preliminary stage expansion).
  7. In certain cases, the seller reserves the right to repurchase the property in accordance with §§ 456 ff. BGB or the obligation to make additional payments: a. In the event of incorrect information from the applicant in the award procedure. b. In the event of a violation of personal use and sales restrictions. c. In the event of a breach of the construction and purchase obligation.
  8. Right of repurchase: When exercising the right of repurchase, the municipality has to repay the purchaser the purchase price minus any depreciation, encumbrances and plus connection costs; Likewise, the building value is reimbursed for developed properties. The building value is determined by the responsible expert committee (Office for Land Management).
  9. Additional / additional payment obligation: If the return transfer is not used, the purchaser undertakes to reimburse an appropriate part of the discount to the municipality. This percentage is calculated from the period that is missing up to 10 years of use, i.e. a refund of the discount of 10% per year.
  10. Construction / purchase obligation: With the purchase of the property, the purchaser undertakes to build a residential building within a period of 3 years from the completion of the development (preliminary expansion) according to the stipulations of the development plan (ready for occupancy).
  11. Own use: The properties are sold with a personal use obligation. This means that the purchaser undertakes to live in the house without interruption for a period of 10 years after it is ready for occupancy. If the property consists of 2 residential units, the buyer has to live in one residential unit with primary residence for the specified period. If you move out earlier, the obligation of the percentage reimbursement of the discount to the municipality according to point 9 also applies here.
  12. Sale restriction: If the property is sold or given away in whole or in part, the municipality of Rodenbach has the right to buy back the property.

The Road Ahead For Social Credit Rating


The municipality of Rodenbach grants a child bonus in the form of a discount on the sales price on the purchase of building land for the construction of residential buildings for personal use. The children for whom the applicant is entitled to child benefit and who live in his household when the purchase contract is concluded and are registered with their main residence are taken into account. Applicants receive a discount of € 5 per child per square meter. The maximum discount is limited to € 15 per applicant.

Note on legal entitlement

Citizens have no claim, since there is no legal claim to the allocation of a communal building plot. There is also no legal entitlement to the maintenance of the procurement guidelines. By participating in the selection process, the interested parties declare that they agree that a judicial review of the award process is excluded.


A plot of land is reserved for 2 months without obligation and free of charge. If a purchase decision is not yet possible, the reservation will be withdrawn and the property will be released again for new interested parties. The municipal council of the Rodenbach municipality discussed the allocation of the municipality’s own building plots in the construction area “south of Adolf-Reichwein-Straße” at the public council representatives meeting on November 12th, 2020 and decided to make the allocation in accordance with this allocation guideline.

chain bridge over danube river

Reach and Scope of Scope Ratings

Agencies, Read

Google Trends provides access to a largely unfiltered sample of actual search requests made to Google.

It’s anonymized, because no one is personally identified. It is also categorized, i.e. determining the topic for a search query, and aggregated, i.e. grouped together. This way it displays interest in a particular topic from around the globe or down to city-level geography.

Google Trends normalizes search data to make comparisons between terms easier. Search results are normalized to the time and location of a query by the following process: Each data point is divided by the total searches of the geography and time range it represents to compare relative popularity. Otherwise, places with the most search volume would always be ranked highest. Different regions that show the same search interest for a term don’t always have the same total search volumes.

Many people don’t bother typing in an address like https://www.scoperatings.com/ in full to get to this website. If you use a Chrome browser, all you have to do is write “scope ratings” and then go to the website you are looking for with one click. That is why the data from Google Trends is interesting to find out in which countries the Berlin rating agency is searched.

As the evaluation on February 5, 2021 shows, Scope Ratings are mainly sought in Hungary.

Scope Ratings is commissioned by the Hungarian Central Bank to carry out the ratings of the applying issuers and the bonds to be issued.

That was back in 2019. “Scope successfully prevailed in the bidding process and convinced the central bank with its expertise,” said the then COO of Scope Group, Torsten Hinrichs. “The added value lies in a differentiated approach that opens up a new perspective – for example by taking regional characteristics into account.” Torsten Hinrichs left Scope Group by end of 2019.

The structure of the bond purchase program presented by the Hungarian Central Bank under the name “Bond Funding For Growth Scheme (BGS)” is similar to that of the European Central Bank (ECB). The total volume of 300 billion Hungarian forints (HUF) corresponds to around 921 million euros, which is 0.7% of Hungary’s gross domestic product. Bonds from Hungarian companies that do not come from the financial sector are purchased, denominated in HUF with terms between three and ten years. A rating of at least B+ is required for an award. The ratings for bond issues that have taken place are published. The bond purchase program was launched on July 1, 2019.

The background to the program is the intention of the central bank to diversify the financing alternatives for Hungarian companies, i.e. to open up other possibilities for raising capital in addition to traditional bank loans, including a liquid market for corporate bonds. The central bank will buy up to 70% of a single bond.

In the two years since the program was introduced, the demand for Scope Ratings is mainly in Hungary, as the Central Bank of Hungary buys bonds from Hungarian companies with a Scope rating under the conditions mentioned. Since the Hungarian central bank buys the overwhelming majority of corporate bonds, the interest in scope ratings is likely to exist primarily among Hungarian companies that are interested in their refinancing by the Hungarian central bank.

This graphic from Google is therefore also interesting, as it shows as of February 2021 that Google received search queries for scope ratings mainly from Berlin over the last year in Germany.

From the federal states with the financial centers of Germany, where most of the institutional investors and family offices with large assets are located, above all in Frankfurt and Munich, but also in Düsseldorf or Hamburg, Google was unable to register any search queries worth mentioning.

In order to answer the question of the importance of scope ratings for investors, the following facts arise:

Subscribe to get access

Read more of this content when you subscribe today.

Collection of Contributions by The Institutional Protection Scheme of EdB

Associations, Authorities, Read

A credit institution is an undertaking which conducts at least one of the banking businesses described in detail in section 1 (1) of the German Banking Act (Kreditwesengesetz) commercially or on a scale which requires commercially organised business operations. The banking businesses include the deposit business and credit business, but also specific securities-related activities such as principal broking services and the safe custody business.

The EdB compensation scheme is in place to protect depositors from the risks associated with the banking business of its members.

If a compensation event occurs, the depositor shall have a right to compensation as provided for by the law from the deposit guarantee scheme of which the CRR credit institution is a member.

The Entschädigungseinrichtung deutscher Banken GmbH (EdB, Compensation Scheme of German Private Banks) is a wholly-owned subsidiary of the Association of German Banks. It was entrusted by the German Federal Finance Ministry with the task of running the statutory deposit guarantee and investor compensation scheme for the private banks in Germany.

The EdB’s job is to compensate the creditors of a bank assigned to it where the bank is unable to repay deposits. Liabilities arising from securities transactions conducted by a credit institution (i.e. bank) as defined in the EU Capital Requirements Regulation (CRR) are also deemed to be deposits.

Pursuant to section 1 (3d) of the German Banking Act, a CRR credit institution is a credit institution that also meets the narrower definition of a credit institution in accordance with Article 4 (1) no. 1 of the EU Capital Requirements Regulation (CRR). CRR credit institutions are supervised in the context of the Single Supervisory Mechanism (SSM) either directly by the European Central Bank (ECB) as significant institutions (SIs) or by BaFin together with the Deutsche Bundesbank as less significant institutions (LSIs).

In accordance with Section 26 (1) of the German Deposit Guarantee Act (Einlagensicherungsgesetz or EinSiG), the CRR credit institutions are obliged to pay annual contributions at the end of each accounting year (Jahresbeiträge). The accounting year covers the period from October 1st of one year to September 30th of the following year. The contributions to the EdB are therefore due for payment on September 30 of each year.

The details of the contribution payment can be found in the ordinance issued by the Federal Ministry of Finance on the financing of the compensation facility of German banks and the compensation facility of the Federal Association of Public Banks in Germany (compensation facility financing ordinance or Entschädigungseinrichtungs-Finanzierungsverordnung – EntFinV), see Federal Law Gazette I of 11 January 2016 p. 9 f.

Pursuant to Section 17 (2) EinSiG, the EdB must ensure that the financial resources available to it reach a target level of at least 0.8 percent of the covered deposits of the institutions belonging to it by July 3, 2024.

The EdB has developed an internet platform for the regular collection of annual contributions to the EdB, via which a questionnaire is made available to the institutes from the end of May / beginning of June each year. A number of key figures and the external rating results must be entered in the questionnaire. The Internet access data for using the platform are sent to the banks annually by post.

The completely recorded questionnaire must be sent electronically via the aforementioned platform together with the following documents (see also Section 15 Paragraphs 2 to 4 of the EntFinV):

  • Asset encumbrance sheets, current and previous year (template F 32.01),
  • COREP sheets, current and previous year,
  • SAKI sheet, current and previous year,
  • Documentation of all ratings valid as of May 31, 2020 in accordance with Section 10 of the EntFinV (at least one rating is required)

The following documents are to be sent in paper form to the Auditing Association of German Banks e.V.: The fully recorded and legally binding questionnaire including date and institute stamp, and in accordance with Section 34 (1) EinSiG: the audit report for the financial year, insofar as this has not already been sent to the Auditing Association.

The EdB can allow the CRR credit institutions assigned to it to pay up to 30% of their annual contribution in one accounting year by assuming contractual payment obligations. The prerequisites are that the EdB and the CRR credit institute have signed a framework agreement on payment obligations pursuant to Section 21 of the EntFinV and a framework contract on financial collateral pursuant to Section 27 of the Funding Regulation by June 30 of the respective accounting year. In addition, there has to be an agreement on the assumption of payment obligations by September 1st of the accounting year according to § 22 EntFinV for the accounting year and the provision of financial collateral according to § 26 EntFinV.

A contribution notification will be created on the basis of the transmitted data. The contribution notification is an administrative act against which an objection can be raised at the EdB. However, according to Section 32 (1) EinSiG, objections and actions for rescission have no suspensive effect. Pursuant to Section 32 (2) EinSiG, the law provides for the possibility of enforcement from the contribution notice in accordance with the provisions of the Administrative Enforcement Act.

The EdB also has to levy special contributions if it finds that its funds are insufficient to carry out compensation proceedings. Section 29 EinSiG regulates the details.

The contributions to the compensation scheme depend on the creditworthiness of the assigned institute. You will find an explanation in “Creditworthiness functions according to the EntFinV”. The external rating results, which are included in the calculation of the creditworthiness with 25%, are part of these explanations.

With regard to the creditworthiness function, a left-skewed distribution in favor of the discount classes was determined as part of the annual backtesting process, which is also expressed in an increased “µ” in the EBA formula. On the basis of a now broader and qualitatively better database, both individual risk indicators and the transformation functions were validated with the aim of a broader spread. On the basis of transformation functions, the calculated risk indicators are assigned individual risk values ​​(IRSi), which are combined to form a weighted individual risk value. Using the sum value (ARSi) of the weighted individual risk values, the aggregated risk weight (ARWi) is determined based on ten credit rating cagegories using a further transformation function.

The annual contribution is the result of the following formula:

Subscribe to get access

Read more of this content when you subscribe today.

Berechtigungsscheine as an Emerging New Asset Class in Germany


Eligibility certificates (Berechtigungsscheine) are short of becoming a new asset class in Germany.

Since January 2021, the Federal Government of the Federal Republic of Germany has been distributing authorization certificates intended for the purchase of goods with practically no prior notice. Within a few days, markets were created where the certificates of entitlement are now traded. For example, old people or pregnant women were initially benefited by the distribution of “Berechtigungsscheine”. Due to their fungibility, entitlement certificates can be traded so that they can also be used as a means of payment and storage of value for a specified period.

Fungibility (from Latin fungibilis) is generally the property of goods to be determinable according to unit of measure, number or weight and therefore to be exchangeable within the same category for other items of the same type, quantity and quality. This characteristic is also given in the certificates of entitlement issued by the federal government of Germany. Authorization certificates are printed like banknotes in the Bundesdruckerei.

The housing entitlement certificate (Wohnberechtigungsschein), abbreviated to WBS, which has already been introduced in Germany, is not fungible. An applicant must meet certain legal requirements in order to receive a housing entitlement certificate. Colloquially, the housing entitlement certificate is also called § 8 certificate. This is an official certificate in Germany with the help of which a tenant can prove that he is entitled to move into an apartment (social housing) subsidized with public funds. What is new in the system now begun by the federal government of Germany is the fungibility property of the entitlement certificate, as was also the case at the time of the war economy.

Entitlement certificates are similar in function to food stamps (Lebensmittelmarken). A food stamp is a document issued by public authorities to certify that the owner can buy a certain food in a certain amount. In times of need, especially during war, such tokens are issued to the population, supposedly in order to better manage the general shortage of consumer goods.

Different brands can be grouped together in grocery cards (Lebensmittelkarten), because in addition to food, other consumer goods, e.g. rationed heating material (coals), clothing, luxury goods such as cigarettes and alcohol as well as gasoline. The permits are then usually called reference certificates. A special occasion – such as the birth of a child – had to be present or an application had to be made in order to be issued a voucher.

The term “entitlement certificate” (“Berechtigungsschein”) now used by the federal government is known from the German Democratic Republic (DDR). The authorization certificate to receive a GDR visa was the prerequisite for “visits and trips by persons with permanent residence in Berlin (West) to enter the capital of the GDR” (East Berlin) or the GDR itself. Another example are authorization certificates (Berechtigungsscheine) for drinking spirits. The drinking brandy for miners was a brandy that was given out to miners in the Soviet occupation zone and later in the GDR as deputation wages.

At the beginning of the 1960s, a shortage of supplies also meant that certain foods such as butter and meat were temporarily rationed in the GDR. You could only get these groceries at your place of residence upon presentation of a business-related customer ID. A transfer certificate from the local dealer was required for holidays or stays abroad.

The value of entitlement certificates results on the one hand from the rationing, on the other hand from the difference between the personal contribution to be made by the holder of the subscription and the (black) market price of the goods. The system introduced by the federal government of Germany provides for a so-called “personal contribution” (“Eigenbeteiligung”).

Rationing is known from many socialist or communist countries. In Cuba, for example, the distribution of food is rationed. Rationing in Cuba is known as the Libreta de Abastecimiento (“reference booklet”) or Libreta for short. This system determines the reference quantities for each person and the frequency of allocation.

In order to organize the supply of the starving population, the People’s Republic of China also continued to use authorization certificates at least until the end of the Mao period, with which scarce goods were distributed among the needy population.

The system of entitlement certificates now introduced by the Federal Republic of Germany initially only benefits individual population groups such as certain over 60-year-olds or pregnant women. On the (black) markets, prices are currently emerging that are based on the value of the goods to be purchased. For example, there are already numerous offers of authorization certificates on Ebay.

Berechtigungsscheine for twelve FFP2 masks are currently offered for 24 euros on Ebay, for example, but also for 16.50 euros or 37 euros. For the buyer there is an additional payment of 2 euros for each set of 6 masks. It cannot be said with certainty whether the authorization certificates offered on the online portals actually all come from Bundesdruckerei. Likewise, according to testing services in Germany, there is no guarantee that the FFP2 masks that can be obtained would withstand a test by the TÜV.

Whether Berechtigungsscheine can establish themselves as a new asset class depends on the duration of the issue of Berechtigungsscheine, the period of validity of the Berechtigungsscheine and – among other factors – on whether further goods and services will only be available in the future on presentation of entitlement certificates due to shortage management.

Financial Psychologist Recommends Inconspicuous Face masks


FFP2 masks are not just a question of operational risk and the operational risk rating of banks.

“You are by far our dearest customers” – this or something similar can and could be read in some German shops, the reference to the required minimum distance. In view of the ongoing pandemic and slow vaccinations, the end of the exceptional situation in interpersonal dealings is not in sight. “How should financial counselors behave now when talking to customers? What is a Corona-related basic expectation of behavior in counseling?” Janko Laumann, Institute for Applied Financial Psychology, Lecturer at FOM Bonn deals with these questions.

“Especially when customers demand a handshake,” says Janko Laumann, “it can be seen as an affront by advisors if they refuse to shake hands. Accompany the negative behavior with a small sentence: ‘Mr Müller, for your protection it would be better not to.’ So make sure your customer understands your behavior. “

Since the eyes are usually easy to see when wearing a mask, Janko Laumann recommends being particularly cordial, especially under the mask: “A mask covers a large part of the face. The facial expressions can only be guessed rather than they are really visible. Fortunately, the establishment of contact is based on evolutionary biology in such a way that the eyes play the most important role. “

The dangers lie in the fact that the reactions are not recognized under a mask. The mouth instinctively plays a major role in facial expressions when “the teeth are shown”. Janko Laumann recommends financiers speak louder, clearer words in shorter sentences, avoid filler words and be particularly careful when pronouncing number words.

Janko Laumann recommends neutral colors for the mask.

“When choosing the mask, make sure that it doesn’t catch the eye of your customers. Colorful is beautiful and red is a signal color. Colorful and red masks are therefore part of the carnival, but not part of advising customers! Avoid masks with advertising imprints or other messages. These take away any sovereignty and credibility. ” So much for a few examples from a whole series of other recommendations by the financial psychologist.

Manufacturers of FFP2 masks such as EPG Pausa GmbH from the Stolfig Group have adapted to these requirements. Red masks are also offered, which correspond to the corporate identity of savings banks, but otherwise white, blue and black masks and only in other colors upon customer request. The masks from the STOLFIG.SHOP do not show any logos in bright colors, but the logo of a financial service provider is discreetly stamped so that there are no functional restrictions for the mask can have.

FFP2 Mask

React Flexibly to Requirements With FFP2 Masks

Processes, Read

Resilience in crisis situations and flexibility distinguish companies with good ratings.

As a result of the COVID-19 pandemic, the core business of many industries continues to be severely affected. However, many medium-sized companies have reacted flexibly to the new conditions and adapted their production to the circumstances.

An example for this is EPG Pausa GmbH from Stolfig Group. The company started the production of FFP2 masks at the Eichelhardt site and was able to conclude a major contract with the German Federal Government and the state of Rhineland-Palatinate in December 2020. The basis for this success was the EU type examination certification of the products by TÜV Rheinland Intercert Kft.

The Stolfig Group is a development partner of the automotive industry and a first-tier supplier (Tier One). The first wave of the pandemic had already severely affected the order situation, freeing up production capacity.. After the German Federal Government also called on local producers to support them in fighting the pandemic, the Stolfig Group seized the opportunity to build up another mainstay during the crisis. The changeover to a textile product, of course, presented the automotive supplier with a number of challenges. EPG Pausa first had to find suitable production machines, suppliers for the basic materials and qualified staff.

“TÜV Rheinland is an excellent partner in our opinion. The collaboration was highly professional and the communication was always fast and courteous. Despite the holidays at the turn of the year, the certification was driven forward and the audits were conducted at record time in international collaboration.”

Wei Hong, Managing Director of EPG Pausa GmbH

Certification was also more time-consuming than initially anticipated, as FFP2 masks fall under the Personal Protective Equipment Regulation 2016/425 and must also comply with EN149:2001+A1:2009. In partnership with TÜV Rheinland, everything finally went smoothly and quickly, as Managing Director Wei Hong confirmed. The company is now occupied with the distribution and production of larger margins of their new protective masks.

Meanwhile, EPG Pausa is already working on masks for children. Their development must be based on the specific dimensions of children, so that the masks ultimately meet the requirements for safety and wearing comfort. TÜV Rheinland will also carry out the testing of these products.

TÜV Rheinland has tested the masks of EPG Pausa GmbH according to the regulation 2016/425 for Personal Protective Equipment as well as the standard EN149: 2001 +A1: 2009 and was subsequently able to issue the corresponding EU type examination certificate. Now, the company can attach the CE marking to its FFP masks and offer them as Personal Protective Equipment on the European market.

During the pandemic, masks with forged certification marks have repeatedly come onto the market. TÜV Rheinland is an internationally renowned testing service provider and a strong partner for EPG Pausa GmbH and Stolfig Group. The EU’s “New Approach Notified and Designated Organisations” has designated TÜV Rheinland InterCert for the certification of particle-filtering masks. By means of their international network of experts and test laboratories, TÜV Rheinland enables a supplier like EPG Pausa GmbH to test their products quickly and efficiently, since TÜV Rheinland has decades of experience in testing Personal Protective Equipment.

man wearing gas mask standing beside store facade

Crime Detection and Prevention Through AI-based Rating

Crime, Data, Products, Profiling, Read

All eyes on MULTIEYE BOS Manager

Artec technologies AG (ISIN DE0005209589) strategically develops its business with authorities and organizations with security tasks (BOS). It was not just the storming of the Capitol in the United States or the attempt at the Berlin Reichstag that showed that security authorities need to integrate the monitoring and evaluation of social media and other sources of information more closely in crime detection and prevention. The BOS business had already generated a large part of artec’s annual turnover. The cash flow of the company is characterized, among other things, by recurring revenues from cloud and services, an important characteristic in the revenue structure for investors who want to benefit from the ongoing trend at artec technologies AG. Artec sees considerable growth potential in the BOS area for the coming years.

The prerequisites for using this potential are not only given by numerous German security authorities, such as around 50 percent of the state criminal police offices, but also by the fact that artec has positioned itself as a supplier of video information systems, among other things. In 2020, the company successfully positioned itself as a system supplier – everything from a single source.

The heart of this success is the MULTIEYE BOS Manager: a private cloud-based software platform for mobile emergency services, situation centers and control centers. It was developed with specialists from German security authorities and has proven itself over the past year as a central management system for the preparation, implementation and follow-up of classic observation missions. The individually configurable hardware for field operations is also supplied by artec. All processes are compliant with data protection regulations, and artec attaches particular importance to maintaining digital data sovereignty. In view of the exponentially increased complexity of the legal requirements, this is a unique selling point that should not be underestimated.

In addition to the existing BOS customers, a European authority is currently testing the BOS Manager, reports the company, as well as discussions with other authorities in the national and international market. In order to accelerate sales, artec plans to increasingly make systems available to potential customers for a certain period of time and thus convince them to buy or rent.

“The work of the security authorities is becoming more and more complex. In addition to classic observation by cameras, there are also media such as the Internet, TV and streaming. The possibilities for crime detection and prevention are huge, as are the resulting amounts of data, which represent a great challenge. In doing so, isolated solutions from different providers, as they are still often used in authorities today, reach their limits, ”says artec CEO Thomas Hoffmann. “A system platform is needed to structure so-called dirty data, for example from social media channels, video material provided by citizens and other sources, and to merge it with metadata from video observation or other databases. Among other things, this is the prerequisite for subsequent cognitive analyzes, as they are increasingly used in the fight against terrorism.”

Anyone looking for a data collector and processor for security authorities that complies with data protection regulations will find what they are looking for at artec. As a specialist in data collection and processing from audiovisual sources, artec can offer security authorities real added value. With the two platforms XENTAURIX and MULTIEYE, artec has a leading spectrum of sources in the market, from TV and radio to a wide variety of cameras (including body cameras, surveillance systems) and social media streams such as YouTube, Facebook and Tik Tok. The artec systems have been used successfully in practice for years – e.g. by security authorities and media companies as well as in shopping centers and for license plate recognition.

Artec’s future prospects are further brightened by the expansion of the BOS Manager to include AI functions. The expansion of the functionality of the BOS Manager in the current year and beyond is probably the most important strategic goal for artec. Due to increased demand from the customer base and upcoming negotiations, artec’s technology specialists are making appropriate preparations. According to Diepholz, it is planned to expand the manager with essential performance features for area observation in border regions, for large-scale police situations, events and demonstrations. This is to be achieved initially through the stronger integration of XENTAURIX as a source supplier from TV and social media. The integration of other data sources such as drone recordings is also planned. In addition, the possibilities of comparing and linking with existing audiovisual information, such as license plates, faces, motion sensors and video material (dirt data) provided by citizens, are to be expanded through artificial intelligence. In addition, artec will further expand the already existing offer of guaranteeing security authorities technical support around the clock (24/7).

For all of these functions, precise knowledge of the legal situation is essential. In Germany in particular, the protection of privacy is considered a valuable legal asset. Without many years of experience, those competitors who dare to venture into this business area solely because of their technical understanding, but not also because of their legal expertise, can face significant fines or claims for damages. § 823 I BGB expressly names the legal interests of life, body, health and freedom as well as the absolute right to property as such, the violation of which constitutes an obligation to pay compensation. Rights include property and other rights. Property as an absolute right, that is to say, a right that affects everyone, is the only point of contact for the interpretation of “other rights”. As a result, “other rights” can only be those that are absolute. Other rights also include general personal rights.

As a guideline for balancing interests, the jurisprudence developed the theory of spheres. According to this, the requirements for a justified intervention are higher, the more protected the sphere of intervention is. The intimate sphere includes the world of thoughts and feelings. Diary entries, information on the state of health, attitudes towards sexuality etc. enjoy absolute protection. Every intervention – apart from extreme cases – is fundamentally illegal.

Domestic and family life are part of the private sphere. It is also protected by personal rights, but there are exceptions and tolerance obligations. A person in public life, for example, has to tolerate a greater degree of interference with the general right of personality than non-public persons. The social sphere is the least protected. This includes all interactions between an individual and their environment, such as the exercise of their profession. Interventions in this sphere can easily be justified. At this point, the decisive factor is a good argumentation and dealing with the individual case.

An example of an application for one of artec’s goals illustrates the legal situation in the social sphere: after a criminal offense such as that committed at the G20 summit in Hamburg, authorities call for cell phone videos to be made available. Hundreds of videos are then uploaded. The future expansion development of the BOS Manager analyzes the data, sorts out countless duplicates and provides the authorities with a pre-selection of the videos relevant to the investigation. The officers can assess the situation from different angles. In addition, faces, license plates, conspicuous objects or clothing are marked with a “digital fingerprint”. Artificial intelligence can then be used to search for faces or cars in existing databases – e.g. from traffic monitoring or other security cameras. In this way, a movement profile of offenders can be created before and after the event.

monk surrounded by children

Is The Notion of Efficiency Alien to Charity?

Comments, Criteria, Definitions, Methodologies, Read

there are minimum requirements for recognized non-profit organizations. But can their efficiency and effectiveness also be rated?

At effektiv-spenden.org Sebastian Schwiecker, founder and managing director of UES – Gemeinnützige Unternehmergesellschaft (haftungsbeschränkt) für effektives Spenden, tries to give very specific answers to the question of how you can achieve the greatest possible effect with your donation, i.e. where you can help most for each euro.

He believes that the mission of his company is unique in Germany. Although there are two institutions, the German Central Institute for Social Issues (DZI) and PHINEO that assess charity organizations, Sebastian Schwiecker points to fundamental differences in the approach to effektiv-spenden.org.

The DZI, founded in 1893, has been awarding the DZI donation seal since 1992. To obtain this, an organization must undergo an annual audit. If the DZI standards are adhered to, the organization receives the DZI donation seal for the next 4 quarters. The following three are the main points:

  • The fundraising campaign is true, clear and factual.
  • The donations are used purposefully, economically and economically.
  • The organization has functioning planning and control.

Sebastian Schwiecker does not question, that these are criteria that must be met by an organization that wants to provide sustainable, highly effective aid. However, they are not sufficient, says Sebastian Schwiecker, since it would be necessary to examine the effect achieved by the respective aid organization and to put this in relation not only to the costs, but also to other organizations. The DZI does not do either. The information available online about the organizations with the DZI donation seal is limited. On the profile of the World Vision organization, whose total income in 2018 was more than 114 million euros, the full paragraph on the use of funds reads as follows (translated from German):

The share of advertising and administrative expenditure in total expenditure is appropriate according to the DZI standard (“appropriate” = 10% to less than 20%). The effectiveness of the use of funds is checked, and the results are documented and published.

The DZI itself does not examine the effect achieved, Sebastian Schwiecker criticizes and considers the publicly available information as very scarce with less than 500 words per audited organization. For comparison, Sebastian Schwiecker mentions the evaluations by GiveWell on which the recommendations of eeffektiv-spenden.org are based. Here even some of the often more than 100 footnotes are longer than the complete organizational profiles on the DZI website.

Due to this superficial view and the – in the eyes of Sebastian Schwiecker – large number of organizations with the DZI donation seal, most recently well over 200, interested donors are only given limited orientation. Sebastian Schwiecker cautions that the designation of the DZI as “donation TÜV”, which is often used in the media, may be appropriate, but one should be aware that the task of the TÜV is to exclude unfit vehicles from road traffic and not to judge what is best in relation to its costs.

The situation is different with the PHINEO consulting company founded in 2009. Since 2010, it has been awarding the so-called Wirkt-Siegel, which differs from the DZI donation seal primarily in that it carries out a “differentiated assessment of the potential for impact and the quality of the project”. On the one hand, PHINEO concentrates exclusively on projects that are active in Germany. In this way, the most effective approaches from the perspective of effektiv-spenden.org are excluded from start, although even more than in Germany might be achievable with every euro in very poor countries. On the other hand, PHINEO does not compare the audited organizations with one another, argues Sebastian Schwiecker.

If a donor does not want to be satisfied with contributing to positive change at all, but rather pursues the goal of moving as much as possible and as effectively as possible with the resources used, the Wirkt-Siegel offers little support, Sebastian Schwiecker points out, although he admits that he could not claim scientific objectivity for his approach. “But we are firmly convinced that ceterus paribus it is better to help more people than less. To do this,” reads his website, “one has to start by asking the right question, which is who should I support to maximize my impact? So far, nobody in Germany has done that. We want to change that!”

China Emerges as a Winner From The Corona Year 2020


China is one of the very few economies that were able to record growth last year, writes DZ BANK in its “Macroeconomics – Economic Perspectives – Economics Weekly“. In the final quarter, the Chinese economy even returned to the growth path of pre-Corona times. After all, the country in which the pandemic originated can count itself among the winners of the crisis.

“China’s export industry benefited from exceptional demand effects last year”, and the analysts remind the reader of the following: “Initially, the huge needs for medical protective equipment, then the shift in consumption patterns in the developed world – out of services and into industrial products. Additionally, Beijing’s strict Corona policy has restored the confidence of Chinese consumers. A second wave of infection should still be prevented. China should continue to be one of the top growth performers this year.”

stainless steel shopping cart and banknotes

Lack of Financial Education

Advisors, Authorities, Read

“You do not talk about money.” This is a common saying in German. “You do not talk about money? But we should! ”- under this motto, Austria’s Financial Market Authority (FMA) is launching a new information format for consumers with immediate effect: “Let’s talk about money”. Exciting aspects from various basic finance topics shall be prepared on a monthly basis and answers to everyday financial questions are given.

In the USA, companies like Morningstar ensure that private investors are informed about financial issues. The rating agency’s offers range from platforms on the Internet to large events with thousands of visitors.

Great investing advice means understanding investors’ hopes, dreams, and ideals to find out what really matters. Morningstar doesn’t just focus on the finish line, but focuses on the entire journey. This way, Morningstar has been empowering investor success since 1984, and they have seen firsthand and learned how great advice can help people reach their goals, how to avoid traps and evade scammers.

In German-speaking countries, consumers are not sufficiently aware of the activities of rating agencies. Therefore, regulators are trying to fill the loophole. In the corset of state regulation, however, the authorities’ options to help consumers are ultimately limited. Morningstar also has a German-language website with information for private investors.

The first issue starts with the topic “Beware of investment fraud!” and explains how, with the help of a few simple steps, consumers can ensure that they do not fall victim to financial fraud before making an investment decision. In February, the FMA will provide information on what to consider when taking out an online consumer loan; in March there will be tips on using insurance comparison portals.

“With this new format, we would like to offer an objective source of information to all those who feel insecure about the breadth and complexity of the various financial topics and are looking for understandable answers to everyday questions about money,” said FMA board members Helmut Ettl and Eduard Müller. The FMA derives the topics of the new format from the most frequent inquiries in its consumer information and then prepares them briefly and in simple language, according to Ettl and Müller.

Collective consumer protection has been an operational supervisory and audit focus of the FMA for many years. After the Finance ABC on the FMA website, “Let’s talk about money” is the second proactive financial education initiative. All issues are available both in print and online at the website https://redenwiruebergeld.fma.gv.at/.

crop male player with game money playing monopoly

BaFin Corrects False Warning Against a Real Company and Warns Against Fake Business of a Doppelganger

Authorities, Read

Following its consumer report of December 3, 2020, the Federal Financial Supervisory Authority (BaFin) now makes it clear on January 18, 2021 that the activity as “asset manager” is not used by HTG Consulting GmbH, but by unknown third parties. HTG Consulting GmbH became victim of identity theft.

On December 3, 2020, BaFin reported, among other things, that HTG Consulting GmbH was promoting to work as a “trust manager” or “end customer manager” or “support employee in asset management” or “asset manager”, make their private account available in order to accept and forward payments on instructions.

With such “business models”, the fiduciary managers risk that the funds transferred to their accounts come from criminal, in particular fraudulent, activities. If you accept the job offer as a financial agent, there are serious consequences under civil and criminal law. The activity as a financial agent can also be prosecuted by the BaFin. Insofar as the companies claim that they have reported the accounts to BaFin as “trust accounts” or “asset accounts”, BaFin makes it clear that there is no such procedure for reporting trust accounts.

The clarification by BaFin shows that the Federal Agency cannot effectively act as a rating agency that continuously provides consumers with an overview of serious, less serious or dubious offers. Professional fraudsters make use of various possibilities of deception. As a result – as happened here – BaFin must publish “warnings” against reputable companies, although in reality only the false doppelganger is meant.

In China such fraud is supposed to be put to an end by the social credit system. Social credit ratings are intended to make the reputation of market participants transparent and to differentiate between trustworthy and less trustworthy addresses. The implications for data protection and citizen control are far-reaching. Although the problems of dubious offers and identity theft to be solved are similar in Western countries, convincing responses from the West regarding the Chinese system are still pending.

pink butter cream

Art Market Picking Up


Players’ confidence in the art market is improving, measured live by Artprice.com.

The theoretic principles behind this index are as simple as the ones behind the Consumer Sentiment Index in the US. This index constitutes a reference in every single global marketplace. The principles are based on the same method as used for the Consumer Sentiment Index by the Survey Research Center from the University of Michigan.

Artprice aims at conducting a survey among its 4,500,000 members, mostly art market active players, around 4 questions. The representative sample varies all the time. Only the last 1,000 responses will be used to process the latest values of the AMCI (by Artprice).

For each of the four questions, there will be 3 choices given (positive, negative or neutral) and as many qualitative variables. The responses are broken down into categories which form the results. The Art Market Confidence Index is drawn from the average percentage of positive answers minus the negative ones and calculated for each of the 4 questions.

Artprice wants this synthetic indicator to be compared to other economics or social tendencies no matter the time or space. Ever since 1997, Artprice Econometrics department has developed a set of algorithms for indices based on its knowledge and a unique database and has shaped its indices and indicators as a reference in the Art Market, making Artprice the world leader in Art Market information (source © Artprice.com).

Quality Face Masks Are Among The Top Ten Donation Requests

Advertising, Read

Donations are resources. Who donates invests. Therefore, every donor is interested in how likely it is that the goals of the donation will be achieved. Assessing and classifying this probability of reaching the aims of a donation is the subject of a charity rating.

What do donors want to donate? Donor priorities change with circumstances and people’s perceptions. If flood disasters occur or earthquakes shake the cities, donors focus on those affected. Charity organizations also use the pictures of refugees to collect donations. What were the motives for people in the USA to donate in 2020? An indication of the goals pursued with donations results from the search queries on the search engines. This is how Google Trends lists the most frequent search queries.

Protection against infection by the corona pandemic reached the top ten most popular donation motives in the USA. Americans were particularly often looking for ways to donate protective masks.

The list shows what US donors searched for on Google

N95 respirators and surgical masks are examples of personal protective equipment that are used to protect the wearer from airborne particles and from liquid contaminating the face. The US Centers for Disease Control and Prevention (CDC) does not recommend that the general public wear N95 respirators to protect themselves from respiratory diseases, including coronavirus (COVID-19). Those are critical supplies that must continue to be reserved for health care workers and other medical first responders, as recommended by current CDC guidance. The persistent shortage of masks in the US is limiting the ability of many Americans to protect themselves adequately.

The situation is different in Germany, where companies have set up factories since the outbreak of the pandemic and then started producing face masks. However, many people in Germany cannot afford high-quality masks for everyday use because the masks should be changed every day. The expenditures for low-income sections of the population, especially for retirees with low retirement benefits, add up to considerable sums.

Therefore, more and more donors are looking for ways to donate high quality masks. There is a European standard. The EN 149 standard defines performance requirements for three classes of particle-filtering half masks: FFP1, FFP2 and FFP3. FFP1 defines the least filtering mask of the three, since aerosol filtration percentage is only 80% minimum, the internal leak rate has a maximum 22%. Such a mask is mainly used as a dust mask (for example for DIY jobs). Dust can cause lung diseases, such as silicosis, anthracosis, siderosis and asbestosis (in particular dust from silica, coal, iron ore, zinc, aluminium or even cement).

Much better protection is guaranteed by FFP2 masks, which is similar to the N95 mask in the USA. FFP2 masks have an aerosol filtration percentage of not less than 94% and an internal leak rate with a maximum of 8%. This mask offers protection in various areas such as the glass industry, foundry, construction, pharmaceutical industry and agriculture. It effectively stops powdered chemicals. This mask can also serve as protection against respiratory viruses such as avian influenza, COVID-19 or severe acute respiratory syndrome associated with the coronavirus (SARS), as well as against the bacteria of pneumonic plague and tuberculosis.

Donors who value the effect of their donations therefore concentrate on the most effective masks, such as those offered in the STOLFIG.SHOP.

How to Run a Credit Reporting Agency in China

Agencies, Authorities, Bureaus, Compliances, Governance, Read, Registrations, Regulations

The People’s Bank of China issued a Draft for comments on “Measures for the Administration of Credit Investigation Services“. It is intended to regulate the credit investigation business and related activities, and promote the healthy development of the credit investigation industry. This is formulated in accordance with the “Civil Code of the People’s Republic of China”, “The People’s Bank of China Law of the People’s Republic of China”, “Regulations on the Administration of Credit Investigation Industry” and other laws and regulations.

Who is affected?

These Measures shall apply to individuals, enterprises, institutions and other organizations that carry out credit investigation services and related activities within the territory of the People’s Republic of China, but these Measures are also applicable to the credit investigation business and related activities of residents of the People’s Republic of China (natural and legal persons) outside the People’s Republic of China.

The term “credit information” refers to various types of information used to determine the credit status of individuals and enterprises by providing services for financial and economic activities. Personal and corporate identity, address, transportation, communication, debt, property, payment, consumption, production and operation, fulfillment of legal obligations and other information, as well as analysis and evaluation of the credit status of individuals and companies based on the foregoing information information are all considered to be “credit information”.

When engaging in credit investigation business and related activities, the lawful rights and interests of information subjects shall be protected in accordance with the law, information security shall be protected, and the leakage and abuse of credit information shall be prevented. Engaging in credit investigation business and related activities shall follow the principles of independence, objectivity, and impartiality, and shall not make discriminatory arrangements that violate social public order and good customs, and shall not provide exclusive services with the help of an advantageous position.

The collection of credit information by credit reporting agencies in China shall follow the principle of “minimum and necessary” and shall not collect excessively.

Credit reporting agencies shall not collect credit information in the following ways:

Subscribe to get access

Read more of this content when you subscribe today.

When collecting credit information, credit reporting agencies shall review the business legitimacy, information sources, information quality, information security, and authorization of information subjects of the information providers to ensure the legality, accuracy and sustainability of the collection of credit information.

Credit reporting agencies in China shall clarify their respective rights and obligations with information providers in terms of data correction, objection handling, and information security. The People’s Bank of China expects credit reporting agencies operating personal credit reporting services to formulate plans for collecting personal credit information, and report to the People’s Bank of China on matters such as the collected data items, the correlation with credit, and the protection of information subjects’ rights and interests.

The collection of personal credit information by a credit reporting agency shall obtain the consent of the information subject, and clearly inform the information subject of the purpose, source and scope of the collection of credit information, as well as the possible adverse consequences of not agreeing to the collection of information. Where a credit reporting agency obtains personal consent through an information provider, the information provider shall clearly inform the information subject of the name of the credit reporting agency. When collecting non-public corporate credit information, credit reporting agencies shall adopt appropriate methods to obtain the consent of the enterprise. The collection of credit information related to the performance of duties by corporate directors, supervisors, and senior executives by credit reporting agencies shall not be regarded as personal credit information.

Credit reporting agencies shall follow the principle of objectivity in sorting, storing, and processing credit information and shall not tamper with the original data. If a credit reporting agency finds information errors in the process of sorting, storing, and processing credit information, if the information provider reports an error, it shall promptly notify the information provider to correct it; if it is an internal processing error, it shall promptly correct it, and improve the internal processing flow.

5 Years Retention Period

The retention period of bad personal information collected by credit reporting agencies in China shall be 5 years from the date of termination of bad behavior or incident. When bad credit information expires, the credit reporting agency should delete it. If it is used as sample data, it should be de-identified and moved to a non-production database for storage to ensure that personal credit information is not directly or indirectly identified. The People’s Bank of China encourages redit reporting agencies to separate personal identification information from other credit information, and implement physical isolation.

Credit reporting agencies shall take appropriate measures to conduct necessary review of the identity, business qualifications, and purpose of use of information users. They shall conduct necessary review of the network and system security and compliance management measures of information users who access the credit reporting system through the Internet, monitor the inquiries, discover violations, and stop services in a timely manner. Credit reporting agencies shall conduct necessary review of information users to ensure that information users obtain the consent of the information subject when inquiring about personal information and use it for the agreed purpose. The use of credit information provided by credit reporting agencies by information users shall be used for lawful and legitimate purposes and shall not be abused.

Information users shall use personal credit information for clear and specific purposes, and use them in accordance with the purposes agreed upon with the information subject. If they exceed the agreed purposes, they shall obtain separate consent. Information subjects can inquire about their own credit information from credit reporting agencies. If the credit reporting agencies have not collected the information subject’s information, they should clearly inform them that if they have collected the information subject’s information, they should provide the information subject with the collected information content.

Credit reporting agencies in China shall provide personal information subjects with free credit report inquiry services twice a year through various methods such as the Internet, business premises, and entrusting other institutions. If a credit reporting agency entrusts other agencies to provide free credit report query services to information subjects, it shall review the qualifications, service capabilities, safety protection facilities, and compliance requirements of the entrusted agency, and be responsible for the entrusted agency’s inquiries and leaks by joint and several liability.

The subject of personal information in China has the right to request a complete credit report from the credit bureau. The content of credit reports provided by credit reporting agencies to individuals shall not be less than the content of credit reports provided to information users. Credit reporting agencies in China shall not charge information subjects for the reason of deleting bad information or not collecting bad information.

Where credit reporting agencies provide credit information inquiry products and services such as credit reports, they shall objectively display the content of the inquired credit information, and explain the content of the inquired credit information and professional terms. If a credit reporting agency provides a credit report product, the content of the report shall include the information user’s inquiry records, objection marks, and information subject statement. Credit reporting agencies that provide evaluation products and services such as portraits, scoring, rating, etc., shall establish evaluation standards, and must not use elements that are not related to the credit of the information subject as evaluation standards. Where a credit reporting agency provides personal credit evaluation services, all data used for evaluation shall be displayed in the credit report provided to the information subject. Credit reporting agencies shall disclose the scoring methods and models used in personal credit evaluation products, and the degree of disclosure shall be limited to reflecting the credibility of the evaluation.

If credit reporting agencies provide corporate entities or debt credit rating services, they shall comply with relevant management regulations on credit rating businesses. Where credit reporting agencies provide anti-fraud products and services, they shall establish standards for identifying fraudulent credit information.

Credit reporting agencies providing credit information inquiry, credit evaluation, and anti-fraud services shall report the following matters to the People’s Bank of China or its branches above the provincial capital (capital) city center branch (hereinafter collectively referred to as the branch):

Subscribe to get access

Read more of this content when you subscribe today.

Credit reporting agencies shall not provide the following credit reporting services and products:

Subscribe to get access

Read more of this content when you subscribe today.

Credit reporting agencies shall formulate safety management systems involving all business activities and equipment and facilities, and adopt effective protective measures to ensure the security of credit information.

Individual credit reporting agencies and corporate credit reporting agencies that store or process the credit information of enterprises of more than 500,000 enterprises shall meet the following requirements:

Subscribe to get access

Read more of this content when you subscribe today.

Credit reporting agencies shall ensure the safety of the operating facilities and equipment of the credit reporting system, security control facilities and APPs and other mobile internet terminals, do a good job in daily operation and maintenance management of the credit reporting system, and ensure the physical security of the system, network security, and host security, application security, data security and client security, prevent data loss and destruction, and prevent illegal intrusion into the credit investigation system.

The credit reporting agency shall do a good job in personnel safety management in terms of personnel recruitment, personnel leaving, personnel assessment, safety awareness education and training, and external personnel visit management. Credit reporting agencies shall strictly limit the authority and scope of staff who inquire about and obtain credit information, and they shall establish operating records for staff inquiring and obtaining credit information, and clearly record the time, method, content and purpose of staff inquiring and obtaining credit information.

Credit reporting agencies shall establish an emergency response system. When major credit information leaks occur or are likely to occur, they shall immediately take necessary measures to reduce the harm and report to the People’s Bank of China and its local branches.

For credit reporting agencies to carry out credit reporting services and related activities in China, the production database and backup database shall be located in China. Credit reporting agencies that provide personal credit information abroad shall comply with the provisions of national laws and regulations. Credit reporting agencies providing corporate credit information inquiry services overseas should review the identity and purpose of information users, ensure that credit information is used for reasonable purposes such as cross-border trade and financing, and provide it in a single inquiry. Credit reporting agencies shall not transmit the credit information of batch enterprises in a certain region or industry to the same information user overseas. Credit reporting agencies that provide corporate credit information overseas should file with the People’s Bank of China. If a credit investigation agency cooperates with an overseas credit investigation agency, it shall file with the People’s Bank of China after the cooperation agreement is signed.

Credit reporting agencies shall disclose the following matters to the public and accept social supervision:

Subscribe to get access

Read more of this content when you subscribe today.

China’s Administrative Measures for Credit Investigation and Regulations on the Administration of Credit Investigation Industry

Authorities, Read, Regulations

On January 11, 2021 the People’s Bank of China announced the “Administrative Measures for Credit Investigation (Draft for Comment)”. This is another heavy new regulation that the credit reporting industry will usher in after the 2013 “Regulations on the Administration of Credit Investigation Industry” and the “Administrative Measures for Credit Investigation Institutions”.

The “Measures” have seven chapters and 46 articles, which stipulate the scope, collection, sorting, storage, processing, provision, use, safety, cross-border flow and business supervision and management of credit information, clearly define credit information, and emphasize the need to strengthen personal rights and protect the rights and interests of corporate information subjects to ensure information security.

“The “Measures” can be said to have come out after a lot of calls, and the market is paying great attention to it.” Su Xiaorui, a senior researcher at the Ma Dai Research Institute, said that in recent years, the Internet ecology has been enriched, and the dimensions of personal credit data have been extended, such as online shopping, social relations, travel status, financial holdings, etc., but these data are mostly controlled by internet giants, and it is urgent to regulate the collection and use of data.

The development of credit investigation industry in the era of digital economy calls for new regulations. The “Measures” are intended to better adapt to the development trend of the credit investigation industry in the digital economy era. In fact, every time the relevant laws and regulations of the credit investigation industry are released, they are closely related to the actual situation of market development.

Since the establishment of the Credit Information Center of the People’s Bank of China in 2006, the construction of the country’s credit information system has entered a stage of steady progress. After years of deliberation and research, on March 15, 2013, the country’s first credit reporting industry regulation, the “Regulations on the Management of Credit Reporting Industry,” was officially implemented. The “Regulations” apply to the collection, sorting, preservation, and processing of personal or corporate credit information within China, and credit investigation services and related activities provided to information users. The target of the regulation is mainly the business activities of credit reporting agencies and the supervision and management of credit reporting agencies.

In the same year, in accordance with the “Regulations”, the People’s Bank of China issued the “Administrative Measures for Credit Investigation Institutions”, which refined and clarified the market access of individual credit investigation institutions and their filing conditions. Since then, the People’s Bank of China has been continuously researching and looking for the right time to issue the “Credit Investigation Management Measures.”

In the era of digital economy, credit investigation is facing new challenges. The introduction of the “Measures” can better meet the needs of digital economy development under new technological conditions and increase the effective supply of credit investigation. Technologies such as blockchain, cloud computing, and big data have made it easier to collect and process a large amount of data involving credit information. Credit investigation services are gradually expanding from bank credit to commercial credit and credit-related alternative data fields in China.

It is in the above context that the promulgation of the “Measures” has begun to accelerate. On the one hand, the introduction of the “Measures” can better meet the needs of financial innovation and inclusive finance. Households without credit records, “white households” or “quasi-white households” (mainly small and micro enterprises, individuals who just worked) lacking credit records were mostly due to information asymmetry. It is difficult to enjoy normal financial services for these groups, Therefore, non-credit alternative credit data will play a greater role.

On the other hand, the “Measures” also strengthened the protection of personal information, taking into account information security and information compliance. In the development process of the credit investigation industry, some new phenomena have also attracted great attention from all walks of life. Due to the lack of clear business rules for credit investigation in new business models, problems such as unauthorized collection and inadequate protection of information subjects’ rights and interests have emerged. To fundamentally solve the above-mentioned problems, it is necessary to “correct the roots” from the legal level.

In addition, the promulgation of the “Measures” is also to meet the needs of opening up. The “Measures” clearly stipulate the overseas credit investigation business and related activities for residents of the People’s Republic of China, and the cross-border flow of credit information, which is an effective supplement to the previous regulations.

One of the highlights of the “Measures” is that it clarifies what is credit information. The understanding regarding identity, data on payment transactions, property, and whether social information and other data belong to credit information is not uniform. In addition, with the rapid development of science and technology, information has broken through traditional cognitions in terms of definition, circulation, and transactions. In practice, credit information has already broken through the scope of lending information.

In accordance with the principle that substance is more important than form, the “Measures” include all types of information that provide services for financial and economic activities. Information used to determine the credit status of individuals and enterprises, including but not limited to: personal and enterprise identities, addresses, transportation, and communications., debt, property, payment, consumption, production and operation, fulfillment of statutory obligations and other information, as well as analysis and evaluation of information based on the aforementioned information on the credit status of individuals and enterprises, are all regarded as credit information. All activities that collect, organize, store, and process credit information and provide it to information users are all credit investigation services and must be included in the Chinese credit investigation supervision.

It is worth noting that some information belongs to the category of personal privacy, and even licensed credit reporting agencies cannot obtain and call relevant information at will. The information can only be collected when the information subject is fully informed of the possible adverse consequences of the collection and use, and sufficient authorization has been obtained, such as property information; including religious beliefs, genes, fingerprints, blood types, and diseases. Such personal privacy information as well as information prohibited by laws and regulations from being collected fall into the category of strictly prohibited collection, and credit reporting agencies shall not collect it.

Clarifying what is credit information will help prevent personal information from being excessively collected, improperly processed and illegally used, and will help improve the transparency of credit investigation business activities: Follow the “minimum, necessary” principle and strengthen the protection of information subjects’ rights and interests.

Profiling and evaluations of individuals using personal credit information” are all credit investigation services, which means that personal information services provided by some large internet platform companies will also be included in credit investigation.

At present, there are some big data risk control companies and data service providers under the banner of credit investigation in the market, and there are many large internet platform companies. These companies take advantage of the market and do not have sufficient authorization. These institutions wander the legal boundaries, but in fact they are not subject to corresponding supervision. With one-time authorization, infinite collection, and unlimited use, opaque processing, and the lack of objective and fairness in automated decision-making, the right to know, consent, and dissent cannot be guaranteed.

In response to the above problems, the “Measures” put forward the principle of “minimum and necessary” information collection around the links of credit information collection, sorting, storage, processing, provision and use, and clearly inform the information subject and obtain consent, and use it for legal purposes. It helps protect the legitimate rights and interests of information subjects and realize the safe, compliant and reasonable flow of credit information.

For the restricted area of information collection, the “Measures” also clearly stipulate that agencies are not allowed to deceive, coerce, induce, collect fees from individuals or companies, collect from illegal channels, or otherwise infringe the legal rights and interests of the information subject to collect credit information.

In addition to regulating the domestic credit investigation business, the “Measures” also make clear provisions on the cross-border flow of credit information. This is seen as an inevitable requirement for building an open economy. As an integral part of the modern financial system, expanding the opening up of the Chinese credit investigation industry is an important part of implementing the financial opening up strategy. Moreover, with the introduction and implementation of the “Belt and Road” initiative, the economic and trade between China and the countries along the “Belt and Road” are getting closer and closer. Chinese enterprises investing cross-border all require cross-border exchanges and cooperation of credit information.

In previous laws and regulations, there was no clear provision for this part. With the “Measures” released, cross-border credit information flow and cooperation are expected to break. According to Article 24 of the “Regulations”, the sorting, storage and processing of information collected by credit reporting agencies in China shall be carried out in China. Credit reporting agencies that provide information to overseas organizations or individuals shall abide by laws, administrative regulations, and relevant regulations of the credit reporting agency under the State Council of the People’s Republic of China.

In this regard, the “Measures” emphasize that these measures are also applicable to the credit investigation business and related activities of residents (natural and legal persons) of the People’s Republic of China outside the People’s Republic of China.

At the same time, the “Measures” have made clearer regulations on cross-border flows of credit information. For example, if a credit investigation agency provides corporate credit information inquiry services overseas, it shall ensure that the credit information is used for reasonable purposes such as cross-border trade and financing, and provide it in a single inquiry manner. It is not allowed to transmit bulk credit information to an individual user overseas. Credit reporting agencies that provide overseas corporate credit information inquiries or which are cooperating with overseas credit reporting agencies shall file with branches above the central branch of the provincial capital of the People’s Bank of China.

Well on Track with Around 50% Growth


The business development of artec technologies AG (ISIN DE0005209589) in 2020 was positive overall, despite challenges related to the corona pandemic, reports the company from Diepholz / Bremen. After annual sales that increased by around 50% to EUR 3.15 million, the Management Board expects – as forecast, subject to the review – a significantly improved result compared to the same period of the previous year (earnings before taxes 2019: -0.68 million Euro).

In addition to the positive operational development, artec has achieved important strategic milestones, especially in the business with authorities and organizations with security tasks (BOS), from which the company will benefit in the future. In 2020 artec achieved around two thirds of its sales with customers from the BOS area.

In 2020, the company artec agreed new contracts for recurring sales with service, cloud services and software upgrades with a term of up to 4 years in the amount of 750,000 euros. This means that incoming orders in the area of ​​recurring sales were at a record level and well above the planned 500,000 euros. The clients are existing and new customers from both the security and broadcast business areas. They include, for example, three companies – a sports broadcaster, a news agency and a sports academy – from Qatar. Artec was able to benefit from the market exit of a competitor in particular internationally and win new customers in Spain, Turkey, Oman and the United Arab Emirates. Orders from other media companies have been announced. However, due to the corona pandemic, orders are taking longer. In Germany, 8 of the 14 state media authorities are already among the artec customer base. Service and cloud services have been agreed with all of them.

In 2020, artec agreed service contracts with security authorities in German-speaking countries with a volume of 200,000 euros, according to the report from artec. Artec sees considerable growth potential in this area in particular. Together with specialists from German security authorities, the MULTIEYE BOS Manager was developed as a cloud-based platform for situation centers and control centers, e.g. for crime prevention. The BOS Manager has proven itself in practice with customers in 2020 and has met with great interest from security authorities in the DACH region – an excellent starting point for the future growth of artec technologies AG.

man in red jacket raising his hands

Six UK-Based Credit Rating Agencies Lost Their Registrations

Agencies, Read

The European Securities and Markets Authority (ESMA), the supervisor of European Union (EU) credit rating agencies (CRAs), has withdrawn the registrations of CRAs based in the United Kingdom (UK). ESMA’s decisions follow the end of the transition period of the UK’s withdrawal from the EU, which occurred on December 31, 2020. UK credit ratings will need to be endorsed for EU use.

The CRA Regulation requires ESMA to withdraw the registration of a firm where it no longer meets the conditions under which it was registered, including being a legal person established in the EU.

AM Best Europe-Rating Services Ltd, DBRS Ratings Ltd, Fitch Ratings Ltd, Fitch Ratings CIS Ltd, Moody’s Investors Service Ltd, and The Economist Intelligence Unit Ltd are no longer on ESMA’s list of CRA authorisation.

The ratings issued by the above mentioned CRAs cannot be used for regulatory purposes in the EU unless endorsed by an EU CRA. ESMA, in a previous communication on October 27, 2020, confirmed that all UK-based CRAs except the Economist Intelligence Unit Ltd took steps to ensure that an EU CRA is willing and able to endorse its credit ratings.

Simple Protection Against Investment Fraud


594 victims of financial frauds reported to the Austrian Financial Market Authority (FMA) in 2020 – the highest figure in an upward trend in fraud cases that has been going on for years. The average damage is around € 42,000 per person.

Many overlook the role of rating agencies. Credit Rating Agencies and other agencies rating closed-end funds, mutual funds or many other financial instruments are not only responsible for looking into the future and making forecasts. It is true that this is their chief role. But not the only one. Ratings also have a declaratory function. Anyone who finds a rating on a website of a rating agency can at least be sure that the address in question exists. A question remains, of course, whether e.g. a caller who poses as an employee of a particular company is actually an employee of the specified company. In any case, the risk of fraud is significantly reduced if an investor informs himself in detail on the website of a rating agency before making an investment decision.

Around 40% of the victims of fraud, says the report of Austrian FMA, were contacted by phone – with so-called “cold calling”, supposedly promising investments are offered during a phone call. Around 60% lost their money on the Internet – insider tips and financial products that promise a high profit with low risk were the most common bait here. About half of all scams are aimed at investments in crypto assets.

„Unfortunately, we have been seeing an increase in investment fraud for years. Financial fraudsters lure their victims into the trap with unrealistic promises, mostly with high returns and low risk,“ warn FMA directors, Helmut Ettl and Eduard Müller, and urge caution: „What sounds too good to be true is mostly not good at all.“

The FMA sees the reasons for the sharp increase – the number of victims has doubled compared to 2017 – in the persistent low interest rate environment and digital change: More and more people are investing online in supposedly promising products. The effective prevention of consumer harm through investment fraud is also one of the FMA’s 2021 supervisory priorities, according to the FMA Executive Board.

Before making an investment decision, the FMA advises people to check whether they have all the necessary information about the product and whether they understand it. Furthermore, to check whether the provider has been approved by the FMA or whether a warning has already been issued against him. In addition, the FMA provides consumers with a great deal of information on the subject of „recognizing financial fraudsters“ on its website, including a list of warning signals and examples of current scams.

woman wearing grey long sleeved top photography

IOSCO’s Profiling of Investors’ Risk Appetite

Profiling, Read

The International Organization of Securities Commissions (IOSCO) issued a report with some remarkable findings. Given its mission to assist regulators in responding to the retail market conduct issues caused by stress events such as the current COVID-19 pandemic, the report examines common retail misconduct risks that have arisen in the financial services industry during the pandemic and sets out measures to assist authorities in responding to this unprecedented and challenging environment.

The conclusions are based on preliminary findings and observations of IOSCO member experiences. Common drivers of firm and retail investor behaviour are identified. IOSCO believes that these drivers together create increased opportunities for potential misconduct in periods of stress.

The COVID-19 crisis impacted firm and retail investor behaviour by extreme price volatility during March-April 2020 and the growing pressure of COVID-19 on firms’ profitability. This may have resulted in increased offerings of riskier products and retail investor flow into such products, says IOSCO: “The COVID-19 experience also highlights that retail investor vulnerability may take many forms and vulnerable investors may be more susceptible to financial exploitation during periods of market stress.”

Risk profiling aims to identify a client’s level of required return, and therefore risk, to meet their investment objectives; their risk capacity and; their tolerance to risk. Some statements in the IOSCO report call for deeper knowledge about the risk profiles of investors: “Worsening economic outlook as a result of lockdowns and accentuated by higher volatility can create competitive pressure on firms to survive or sustain revenue levels. When commissions fall and firms begin to struggle with profitability or when volatility increases and retail investors seek out or are lured into investing in volatile markets to make profit, firms may start offering riskier products outside investors’ risk appetite that can result in potential investor harm.”

Psychological studies show that investors’ risk appetite is relatively stable. The attitude of adult investors to risks in their financial investments is relatively stable. Risk profiling is a process that financial advisors use to help determine the optimal levels of investment risk for clients.

Whether IOSCO’s findings demonstrate a spectrum of retail misconduct ranging from the more egregious examples of fraudulent or predatory practices by unlicensed operators to incidents of inadvertent misconduct by regulated entities, still has to be supported by further evidence. Undoubtedly, common types of potentially harmful behaviour that may increase during periods of stress include mis-selling; mis-labelling; and misleading disclosure and investment advice.

Based on its review of the case studies, IOSCO suggests a number of measures that regulators can take in responding to the challenges created by the COVID-19 pandemic.

Rock Tech Rocking the Market

Investors, Read

What made the stock price of Rock Tech Lithium Inc. (Rock Tech) double within just two months? The answer might be here: Apeiron Investment Group, the family office of serial entrepreneur and investor Christian Angermayer is committed to the success of Rock Tech.

Christian Angermayer sees a huge opportunity and the perfect timing for his continued investment into Rock Tech Lithium: “The world is focused on the rise of electric cars – driven by innovators such as Tesla and now also Apple. And rightly so. The era of fossil vehicles is over. Many still underestimate the massive change we are seeing, which will sweep away many traditional car makers. But all the new EV players need Lithium batteries. It fascinates me how much many stakeholders still underestimate the lithium shortage we will in my view soon encounter. Rock Tech Lithium has a bold vision not just to become one of the premier producers of the raw material, but also an innovative Chemtech company”.

Rock Tech just announced the successful closing of its non-brokered private placement of 9,994,447 units of the Company at a price of $0.85 per Unit for gross proceeds of $8,495,279.95. “We have received very positive feedback and high demand for our private placement from renowned institutional investors, confirming that we are very much on the right track,” said Dirk Harbecke, Chairman of Rock Tech, who invested significantly himself. “The collected funds will help us to further accelerate our project development – a huge opportunity in an environment where other projects, also of the global players, still remain on hold due to the corona crisis uncertainties.”

The Offering round was led by Apeiron Investment Group, the family office of Christian Angermayer, who subscribed for over 30% of the Offering and will, after closing, own 19.6% of the Company on a partially-diluted basis. Dirk Harbecke subscribed for over 11% of the Offering, bringing his partially-diluted ownership position, after closing, to 17.7%.

Proceeds from the private placement will be used, says Dirk Harbecke, to fund a Pre-Feasibility Study (“PFS”) on a lithium hydroxide converter, continuing investigations of the Company’s innovative lithium hydroxide processing circuit, further development and permitting work at the Company’s Georgia Lake lithium project and general working capital.

Mitigate Operational Risks By Using FFP2 Face Masks

Advertising, Read

For companies in which employees cannot always keep a safe distance from another, the infection of individual employees and the consequential officially ordered quarantine measures can result in major economic losses.

Companies can effectively counteract this by using FFP2 masks, because FFP2 masks, in contrast to normal mouth and nose protection, also protect the wearer of the mask effectively. A filter performance of more than 94% is required here.

For companies, investing in high-quality masks has the effect of an insurance premium for all employees, with which financial relief can be achieved in the event of danger. The use of masks that employees like to wear limits operational risks and therefore tends to have a positive effect on the company rating.


EPG Pausa GmbH from Eichelhardt aims to meet this requirement with its range of FFP2 masks. “Our special offer for our customers is the possibility to have their masks manufactured with their logo, an exclusive embossing. The logo can be used on an area of ​​max. 30 x 20 mm where it can be embossed,” says Wei Hong, managing director of the German company.

However, color representations of the logo are not possible. But embossing the masks is even more worthwhile when larger quantities are required. “This special service costs € 300 plus VAT for a purchase of up to 3,000 masks. This service is free of charge when you purchase larger quantities. We can already offer the masks in white, black, red and blue. “

“We are assuming,” said the managing director, “that we will complete the certification process in December 2020 and then be able to offer certified FFP2 masks. But even now you can purchase our masks in the same quality. However, we must expressly point out that these masks are then neither medical products nor personal protective equipment. Our delivery time for your personalized masks is currently 10 working days after receipt of the order and the template for the logo with a max. production volume of 10,000 personalized masks per day. “

“In addition to the masks we produce, we can currently also offer fully certified FFP2 masks – although not from our own production,” reports the managing director.

Vectron’s Recurring Income Strengthens Its Rating

Criteria, Read

Vectron Systems AG (Vectron), a leading provider of intelligent, digitized cash register systems consisting of hardware, software and cloud services, with a focus on the gastronomy and bakery sectors, has created itself a better position for its credit ratings. A stable rating history is ensured in particular by sustainable, recurring income. Vectron makes use of this effect to its advantage.

The company has signed a contract with the von Allwörden Group for an extensive renewal of the cash register fleet. As the report from Vectron shows, this contract is a new way of moving away from one-off income to permanent sources of income.

With a total of 493 branches, the von Allwörden Group – i.a. with the brands “Von Allwörden”, “Nur Hier” and “Dallmeyers” – one of the largest bakery chains in Germany. With more than 225,000 installations, the listed Vectron Systems AG is one of the largest European manufacturers of POS systems. The Allwörden Group is now having a large part of its cash fleet renewed.

At the same time, all branches will be equipped with digital services such as the bonVito customer loyalty system. The customer receives hardware, software and digital services within the framework of a 60-month overall contract that will significantly increase recurring income at Vectron, says the company. Even if the exact contractual conditions – it was agreed not to disclose – are not known, it is clear that this will stabilize earnings for the next few years.

“With this innovative offer, Vectron is increasingly relying on recurring income instead of one-off sales revenues in the core business of bakeries,” explains Thomas Stümmler, CEO of Vectron Systems AG.

man in black jacket sitting beside window

Western Countries Still Lack Systems to Fight Identity Theft

Authorities, Crime, Read, Systems

The German Federal Financial Supervisory Authority (BaFin) published an urgent announcement “21.12.2020 | Topic Consumer protection: Warning regarding the website ‘otc-markets.eu'”. Regardless of the warning, the website is still active:

BaFin advises that the website “otc-markets.eu” does not belong to the US company OTC Markets Group Inc. “This is a case of identity theft committed by unknown perpetrators”, writes BaFin.

Identity theft is the crime of obtaining the personal or financial information of another person to use their identity to commit fraud, such as making unauthorized transactions or purchases. Banks and financial service providers and their clients are popular victims. Identity theft is committed in many different ways and its victims are typically left with damage to their credit, finances, and reputation.

It is not only difficult to catch the perpetrators. Shutting down the website also requires complicated legal steps, if at all possible. For many months in 2017 and 2018, for example, there was also a doppelganger from Frankfurt-based ICF Bank AG. The original website of ICF BANK AG is https://www.icfbank.de/. Using popular search engines such as Google or Baidu, Chinese-speaking prospects and customers were taken to a website at this address https://www.icf-bank.com/zh-cn/imprint.asp that had nothing to do with the Frankfurt-based bank, but contained the same information on the regulatory authority aside from incorrect telephone numbers.

If a prospect or customer contacts a fake website and reveals his personal data, trusting the seriousness of the website, the victim enables a multitude of criminal offenses. Once identity thieves have the information they are looking for, they can ruin a person’s credit rating and the standing of other personal information.

The cases show that the new information and communication technologies also demand new answers to the question of evidence and credibility. One of the so far in Western countries unpopular responses of the People’s Republic of China to the challenges mentioned is the introduction of a social credit system.

Another less serious case is blog identity theft. For example, the blog www.everling.de was completely copied and advertised on another website. In this case, the perpetrators benefited from the advertising revenue. All texts, images, even the entire structure of the website were completely copied. The perpetrators benefited from generating advertising income without having to write texts themselves.

The internet presence operated by OTC Markets Group Inc. is “otcmarkets.com”, according to BaFin’s consumer news.

Why Art Rating Criteria Need to Be Repaired

Agencies, Criteria, Read, Repairs, Reports

The Artprice Report, covering 20 years of Contemporary Art auction history, is a basis for understanding why evidence-based “art rating” is more important and urgent today than ever before. The complexity and global nature of the art market has never been greater.

In the last two decades, decisive impetus came from China. “In 20 years,” writes Thierry Ehrmann, CEO and founder of Artprice by Artmarket.com, “the growth of Chinese turnover in the Contemporary Art segment has been phenomenal: multiplied by 65. Including Hong Kong (10%), China generated 33% ($659 million) of the global market in 2019) versus 35% ($695 million) for the United States.”

Thierry Ehrmann sees a multitude of sociological, geopolitical and historical factors, all of which contributed to the rapid rise of Contemporary Art in the global Art Market: “A marginal segment until the end of the 1990s, Contemporary Art now accounts for 15% of global Fine Art auction turnover, and is now its primary growth driver, having increased +2,100% over 20 years.”

Undergoing profound structural changes, with evermore artists (from 5,400 artists to nearly 32,000 today) and evermore artworks (from 12,000 lots offered to 123,000) the 2000 to 2019 numbers show an expansion also geographically, from 39 to 64 countries active in auctions.

“One of the primary factors in its growth was the relatively sudden accession of Chinese buyers to the market, whose arrival also fundamentally transformed it. With the explosion of the Chinese economy, wealthy entrepreneurs began taking an interest in art collecting, while others started buying artworks to diversify their investments.”

The increasing resemblance of the art market to the capital market leads to calls for agencies that – similar to rating agencies like S&P Global or Moody’s on the capital markets – provide investors with market data and data on risks as reliable data providers and opinion leaders.

“The emergence in China of an ‘art business’ sector was both rapid and impressive,” says the Artprice Report, “and it included the appearance of specialized art investment funds. Mimicking stock market practices, ‘shares’ in works were offered with a view to making significant capital gains, quickly if possible.”

“Meanwhile, China began to play a much more active role in the global market. Driven by frenetic economic growth,” goes the simple causality, “it became the new counterbalance to the United States (which it overtook for the first time in 2010). The Chinese eldorado became more and more attractive to international investors, including the world’s leading auction operator, Christie’s, which decided to focus its sales on Shanghai.”

China not only has an impact on market conditions, but also on Contemporary Art itself. In 2019, Jeff Koons’ status of world’s most expensive living artist was reconfirmed thanks to a sculpture which sold for $91 million. The object of the new record was “兔子” (Rabbit, 1986) – considered the most iconic of his works and, by extension, one of the most iconic works in the entire canon of Contemporary Art.

Art rating criteria need to be reconsidered. As the Artprice Report shows, the top positions of the internationally most sought-after artists are taken by the Chinese. This fact shatters, for example, the image of the People’s Republic of China that is widespread in the West as a hardly democratic state with restricted freedom of artistic expression. These restrictions should theoretically have a negative effect on ratings. According to evidence provided, free market conditions in China mobilized more capital and more artistic talent in such a short time than any other country in the world. The economically liberal working environment for cutting-edge artists in China seems to be more inspiring than for their peers in highly state-subsidized art sectors in the West. However, the relevance and siginificance of rating factors and the relationships with other rating criteria require further research.

Companies such as Artprice.com (changing its name to Artmarket.com) and Artnet.com are benefiting from these developments. For the latter, listed company, the share price has more than doubled in the last six months alone.

From Alibaba as “Amazon of China” to Amazon as “Alibaba of the USA”

Advisors, Investors, Read

“Innovative market leaders can excel in emerging countries”, writes a clever investor in his “Christmas letter”, who may be quoted here, but wants to remain anonymous, since his letter is only addressed to his “investors and serves to maintain contact with a few other acquaintances / friends”: “When it comes to innovation, the big US tech companies seem to get the most attention, but this could shift to China and other emerging markets.”

His letter has been reaching his investors and a small circle of acquaintances and friends for decades now. His website doesn’t bother with design, perhaps along the lines of https://www.berkshirehathaway.com/. He has learned that modesty, discretion and restraint are useful for his work. “Accordingly, you are welcome to use the information, but please do not quote me. And a comparison with Warren is flattering, but not correct in terms of size alone; he employs 25 people,” jokes our contact with regard to his own staff.

Anyone who has had the privilege of reading his annual Christmas letters for so many years will remember many of his predictions, which later became a partly joyful and partly bitter reality. Is it because of his strict logic? This and his track record can be thought about elsewhere, here it is permitted to quote a tiny part of his forecasts for 2021:

“We will see,” he foresees, “how emerging-market companies evolve from imitators to true innovators. We used to refer to companies like Alibaba as ‘Amazon China’ or Baidu as ‘Google China’, but these companies actually have their technology developed and localized while accelerating its growth in ways other than the US. “

“Successful newcomers may grow faster than more established companies,” says his math, “probably long before they make a name for themselves outside of their local markets. Pinduoduo, an e-commerce company in China that hasn’t been around for 10 years, but already has a market cap of more than $ 100 billion, and the $ 150 billion multi-service platform Meituan counting over 450 million active users, and companies like these will spring up like mushrooms across industries . “

The Christmas letter bears witness to optimism: “The forecast for the treatment of cancer looks good: The cure for cancer may be closer than you think. Breakthroughs in gene therapy and new applications of artificial intelligence are accelerating drug development. Some types of cancer – may be by 2030 – can be functionally cured by cell therapy. New, reliable tests will enable a very early detection and localization of the development of cancer. After 2030, cancer as one of the main causes of death could be largely eradicated by early detection. “

The next wave of pharmaceutical innovation could come from an entirely unexpected place: “There will likely be many global blockbuster drugs from China by 2030. The country has the largest population of cancer patients in the world, and one in two people is taking a clinical trial, compared to one in 20 in the US. I expect China will start producing new drugs in five to ten years at a tenth the cost of the US. “

The rivalry between the US and China could determine geopolitics: “What felt like an eternity ago, in the time before COVID-19, the trade conflict between the US and China determined the economic framework, but the frosty relations between the two superpowers will also be with the remain one of the most important investment themes for the new US presidents. “

It’s not just about geopolitics. This conflict will also have a direct impact on companies as they will be forced to take sides and perhaps adapt the way they work on both sides. Our investor and advisor reminds you that the US wanted to issue implementing regulations banning the popular TikTok and WeChat apps if the US segments of these companies are not being sold by their Chinese parent companies.

“It is advisable to avoid those players who could get caught in the crossfire, but there are still plenty of great investment opportunities. Chinese internet companies that operate purely on the domestic market, such as Alibaba and Baidu will not suffer from the trade war,” summarizes the capital market expert, “and there are cross-industry innovative startups that were founded by great entrepreneurs.”

How A Credit Rating Agency Should Determine the Weights of ESG Criteria

Agencies, Criteria, Definitions, Methodologies, Read

Moody’s “General Principles for Assessing Environmental, Social and Governance Risks” relate to issues which may have greater downside risk than upside potential for rated issuers. The introduction of these principles is perceived by many issuers as an additional pressure that weighs on them in order to prove their sustainable management. This pressure is unsettling, especially since eco-activists seem uncessantly to come up with new ideas about what additional requirements companies should meet. However, Moody’s methodology shows what rational consideration is all about.

As an example, a company with a track record of health and safety violations may face litigation risks that pressure its operating income, whereas another company that demonstrates outstanding health and safety practices may not see a comparable credit benefit.

Environmental, Social and Governance (ESG) considerations are not always negative; they can be credit strengths. A company or government that has outstandingly strong governance is more likely to have a management culture of 360-degree risk assessment and informed decision-making, which support long-term creditworthiness. Due to the relatively low incidence of ESG strengths that are meaningful to credit profiles, they are also more likely to be considered in other rating considerations outside of a scorecard, but there are exceptions. An example is the business profiles and cash flow stability of renewable energy developers. They may benefit from supportive government policies.

The term ESG refers to a broad range of qualitative and quantitative considerations that relate to the sustainability of an organization and to the broader impact on society of its businesses, investments and activities. Examples include a company’s carbon footprint, or the accountability of a company’s management or a nation’s government.

The criteria used by ESG rating agencies vary widely. Investors as well as issuers complain about the different assessments. In particular, there are no standards by which the correctness of ESG ratings can be objectively checked. The arguments ultimately remain tautological: If arms production is deemed unethical, then companies receive a poor ESG rating if they manufacture weapons. The “performance” of the ratings of an ESG rating agency is good if it has correctly identified companies that manufacture weapons. But whether the underlying dogma is correct is not discussed.

The classification of ESG considerations across financial markets is imprecise, due largely to the multiple and diverse objectives of various stakeholders. Ethical judgments differ massively, even if they have common roots, as in the case of the three world-leading religions of Abraham. Leading credit rating agencies like Moody’s therefore do not get involved in the moral discussion. Instead, they are focused on the aspects of ESG that can have a material impact on the credit quality of an issuer.

Several institutions, notably the Principles for Responsible Investment and the Sustainability Accounting Standards Board, have sought to establish voluntary definitions for ESG, but at this point there is no single set of ESG definitions or metrics that is comprehensive, verifiable and universally accepted. It is not just Jewish, Muslim and Christian approaches that differ. There are thousands of differences among Christians alone. Arbitrary definitions of human rights, fundamental rights, etc. are the result. Legal definitions are therefore only the result of political negotiation or enforcement processes in a political trial of strength and should not be confused with something scientifically observable in nature.

Therefore, the definition of ESG issues is also dynamic because what society classifies as acceptable evolves over time, resulting from new information (e.g., the impact of carbon dioxide emissions) or changing perceptions (e.g., what constitutes privacy). The only way for serious credit rating agencies is therefore to provide transparency into their assessment of ESG risks and benefits by developping an ESG classification nomenclature that includes

  • components (E, S and G) and, for each component,
  • categories and
  • subcategories of the ESG considerations that rating analysts view as most likely to have credit implications across sectors.

“For the E component, the categories are the same for public- and private sector issuers,” writes Moody’s in its updated cross-sector methodology, “and for S and G components, there are different categories for public and private sector issuers.” The materiality, time horizon and credit impact of ESG risks vary widely. Issuers’ fundamental credit strengths or vulnerabilities can mitigate or exacerbate ESG credit impacts. In some cases, ESG-related benefits can be a credit strength. ESG considerations may inform forward-looking metrics or scenario analyses, or they may be incorporated qualitatively.

Given this background, a credit rating agency should seek to incorporate all material credit considerations, including ESG issues, into ratings and to take the most forward-looking perspective that visibility into these risks and related mitigants permits. An ESG rating methodology should only discuss the general principles underpinning the analysis of current and developing ESG risks that can affect credit quality for issuers and transactions in all sectors, because only defaults can be statistically recorded and counted and can thus prove the objectivity of the standards. In this way, credit rating agencies secure the trust of investors who expect rating analysts to provide clear assessments of default probabilities. Moody’s “General Principles for Assessing Environmental, Social and Governance Risks” delivers an example of this approach to ESG considerations.

German Medium-Sized Bond Issuers Avoid German Government Loans

Read, Reports

The financial reports of medium-sized bond issuers in Germany published in 2020 were evaluated and analyzed by URA Research. The URA ratings for 7 bonds were confirmed. According to the report from Munich, the assessment has improved for 1 bond and deteriorated for 10 bonds.

The 3rd bond from Karlsberg Brauerei GmbH and the 6th bond from Neue ZWL Zahnradwerk Leipzig GmbH were newly included in the URA monitoring, reports Jens Höhl, Managing Director of URA Research GmbH.

URA Research notices the development of net financial debt in the observed companies. URA Research defines net financial debt as financial debt minus liquidity. “After all, half of the 13 issuers observed who published interim reports as of September 30, 2020 or at least June 30, 2020 were able to reduce their net financial debt or maintain their existing net liquidity.”

According to URA Research, in 2020, almost half of the issuers were also able to achieve a positive free cash flow so far. URA Research defines free cash flow as the inflow of funds from ongoing business including net interest income minus investment balance.

Missing inflows of funds due to the Corona-related slump in sales could therefore be at least partially offset by cost savings such as short-time work or the suspension of temporary work, by releasing funds in working capital and lower investments. This also fits in with the fact that only a few issuers use government loans. URA Research has no other findings on this.

The “URA stress test” for 45 companies monitored by URA Research shows a similar picture: here, too, almost half had a green light in this sense that it is estimated that the liquidity will last longer than 720 days (ie 2 years) after a 12-month sales decline of 25%. With a 50% drop in sales, it was still a good 15% of the companies.

Future Divisional Structure of S&P Global

Agencies, Read

S&P Global (NYSE: SPGI) and IHS Markit (NYSE: INFO) announced the future divisional structure of the combined company, effective upon completing their pending merger:

Divisional Structure

  • S&P Global Ratings will be led by Martina Cheung, currently President of S&P Global Market Intelligence, upon close. Effective immediately, Martina Cheung will also lead the
  • S&P Global ESG team, consolidating cross-divisional ESG assets with a leadership group designed to scale quickly and accelerate growth.
  • S&P Global Market Intelligence will be combined with IHS Markit’s Financial Services business upon close and led by Adam Kansler, currently President of Financial Services at IHS Markit.
  • S&P Global Platts will be led by Saugata Saha, currently CFO of S&P Global Market Intelligence and Platts, effective January 2021. After close, Mr. Saha will continue leading Platts, combined with the Energy & Natural Resources business of IHS Markit. S&P Global Platts is the provider of information, benchmark prices and analytics for the energy and commodities markets.
  • Martin Fraenkel, currently President of S&P Global Platts, will work closely with Mr. Saha to ensure a smooth transition. Mr. Fraenkel will become Vice Chairman of Platts and continue to serve on the Board of CRISIL until his retirement in September 2021.
  • S&P Dow Jones Indices will continue to be led by Dan Draper, CEO of S&P Dow Jones Indices.
  • S&P Global Transportation will be led by Edouard Tavernier, currently EVP, Transportation with IHS Markit.


Ewout Steenbergen will serve as Chief Financial Officer of the combined company. He will also continue to lead Kensho and upon closing will expand his responsibilities to include Consolidated Markets & Solutions (CMS), a division of IHS Markit.

Integration Management Office

S&P Global and IHS Markit have also formed an Integration Management Office (IMO), which prior to close will be co-led by Martina Cheung and Jonathan Gear, currently Chief Financial Officer of IHS Markit. Following closing, the IMO will be led by John Berisford in partnership with Ewout Steenbergen. Comprising leaders from S&P Global and IHS Markit, the IMO will develop and execute plans to bring together the two companies.

Double-edged Strengthening of Banks’ Equity


A few days after the European Central Bank and the German Federal Financial Supervisory Authority (BaFin), the European Systemic Risk Board (ESRB) is now recommending that distributions continue to be restrictive in view of the corona pandemic. General Board of the European Systemic Risk Board held its 40th regular meeting on December 15, 2020.

According to the ESRB, banks, investment firms, insurers and reinsurers should not make any distributions until the end of September 2021, unless they are extremely careful and observe the requirements of the responsible supervisory authorities. The ESRB advises them to set conservative thresholds and take into account the specifics of the individual financial sectors.

With its decision, the ESRB is moving away from its previous position of foregoing distributions across the board. One background is the prospect of a Covod-19 vaccine, which makes even more severe scenarios less likely. The General Board recognised the importance of distributions in enabling financial institutions to raise capital externally.

“The decision of the ESRB is a confirmation of our previous supervisory practice”, comments BaFin President Felix Hufeld. This also applies to the latest ECB decision on this issue. “We support the general appeal unreservedly and make binding decisions in individual cases – if necessary.” Only those companies are allowed to pay out that are sufficiently solid and that comply with the minimum legal requirements even under corona stress conditions.

Although the General Board recognised the importance of distributions in enabling financial institutions to raise capital externally, the question arises as to how government intervention in the dividend policy of financial service providers should not strain their ability to raise equity.

Since the reasons for and extent of such political interventions are difficult to predict for both investors and analysts, investments in banks are becoming less attractive. Since all of the above-mentioned organizations are aware of these implications, the question of whether nationalization of banks can be avoided must be investigated.

At first sight, the restriction on distributions strengthens the equity base, banks’ resilience and thus also the creditworthiness of financial institutions. However, rating agencies need to consider both short-term and long-term implications. The corona-related interventions make it difficult for the rating agencies to make their forecasts.

DEFAMA’s Gemstones Among German Commercial Real Estate

Criteria, Read

The Berlin-based Deutsche Fachmarkt AG (DEFAMA) invests specifically in small retail properties in small and medium-sized cities, predominantly in northern and eastern Germany. The most important purchase criteria are two or more chain stores with good credit ratings as anchor tenants, if possible no more than 10 tenants and an annual net rent of at least € 100 thousand. The aim is a continuous double-digit net rental return.

DEFAMA’s declared aim is to become one of the largest owners of small retail parks in Germany in the long term. The DEFAMA share is traded in the quality segment m:access of the Munich Stock Exchange as well as on the open market of the Frankfurt Stock Exchange and on XETRA.

DEFAMA has concluded a number of contracts and agreements and purchased a property, which will lead to an overall increase in annualized net rents of around € 250 thousand.

  • DEFAMA signed a purchase agreement for a local supplier near Magdeburg (Saxony-Anhalt). The purchase price is € 1.1 million, which is 10 times the annual net rent. The rentable area amounts to a good 1,000 square meters. The property is in a prime location directly on the main road in the center of the village next to the primary school, a bank branch and a physiotherapy practice and is rented to Netto on a long-term basis.
  • In addition, DEFAMA has concluded new long-term rental contracts in some existing properties. In Löwenberg, for example, a contract was signed with ALDI for an enlarged area. The building application has already been submitted, the corresponding renovation is to take place in the coming year. A contract was signed with Penny for an enlarged space in Hamm in late summer, reports the company. DEFAMA is also investing in Lübbenau, where the areas of Amplifon and the bakery are being enlarged. The total investment for all three measures is around € 2.2 million.
  • Furthermore, in the past few weeks alone, the anchor leases were extended by an average of 4 years in a number of properties. “No investments were necessary for this”, says Matthias Schrade, Management Board of DEFAMA: “This was done partly through the exercise of options, partly through supplements. LIDL extended in Waldeck and Traben-Trarbach, ALDI in Staßfurt, Penny in Rendsburg and Netto in Apolda. Including the exercise of options announced by another anchor tenant, the contracts in question correspond to around 6% of DEFAMA’s total annualized annual net rents.”

Overall, with the investments made of € 3.3 million, DEFAMA will increase rental income by around € 250 thousand p.a. The annualized FFO rises to over € 7 million or € 1.60 per share. Including the contract extensions, annual rental income totaling a good € 1.4 million is secured in the long term. This corresponds to around 10% of the total annualized annual net rents of DEFAMA and, based on the respective terms, rental income totaling over € 8 million.

Lloyd Howell

Agencies, Directors, Read

On December 18, 2020, Moody’s Corporation announced that Mr. Lloyd Howell has been elected as a member of the Company’s Board of Directors, effective as of March 15, 2021. Lloyd Howell also has been elected to serve on the Board’s Audit, Governance & Nominating and Compensation & Human Resources Committees, effective as of March 15, 2021. With the election of Lloyd Howell, the Company’s Board will consist of eleven directors. Lloyd Howell is currently an executive vice president and the chief financial officer and treasurer of Booz Allen Hamilton. Since rejoining the firm in 1995, Lloyd Howell has served in a variety of leadership roles, including Civil and Commercial Group leader and Executive Vice President of Client Services.

As said in Form 8-K Current Report dated December 15, 2020 Llyod Howell will be paid in accordance with the Company’s director compensation plan for non-employee directors, an annual cash retainer of $105,000, payable in quarterly installments. In March 2021, he will receive an annual restricted stock unit award under the 1998 Moody’s Corporation Non-Employee Directors’ Stock Incentive Plan equivalent in value to $180,000 based on the fair market value of the Company’s common stock on the effective date of the grant, which award vests on the first anniversary of the date of grant.

Mr. Howell, 54, joined Booz Allen Hamilton in 1988 and is the firm’s Executive Vice President, Chief Financial Officer and Treasurer. He previously led the firm’s Civil and Commercial business from 2013 to 2016, was Executive Vice President of Client Services from 2009 to 2013 and was Vice President of Strategy and Organization from 2000 to 2009. In 1991, he took a leave of absence from the firm to receive an M.B.A. from Harvard Business School and worked at Goldman Sachs in its investment banking division from 1993 to 1995. He is also a Trustee at the University of Pennsylvania and a member of their Board of Overseers of the School of Engineering and Applied Science.

Shenzhen – The World Economy of Tomorrow

Read, Reviews

You can read it in old German travel guides: Shenzhen was once a fishing village. Shenzhen is not mentioned in the five-volume “Der Neue Brockhaus” from 1975. In 1993, the renowned Brockhaus Encyclopedia reported in 24 volumes under the short keyword “Shenzhen” of only 280,000 inhabitants. Even then it may have irritated readers that the Brockhaus mentions the existence of a 52-story high-rise. In 2017, Shenzhen already had 12.53 million inhabitants. Any German reader looking for answers to the question of what happened there will be happy to encounter the book by Wolfgang Hirn: Shenzhen – Die Weltwirtschaft von morgen (2020 Campus Verlag GmbH, Frankfurt am Main).

Anyone who knows Wolfgang Hirn or his professional background does not have to worry about the technical requirements of the book – it reads evidence-based, detailed and also exciting. Wolfgang Hirn studied economics and political science in Tübingen. After working as a business editor, he worked as a reporter for manager magazin. He has been traveling to China regularly since 1986, published the bestseller “Challenge China” (2005) and most recently at Campus “Chinas Bosse” (2018). He lives as an author in Berlin and writes on topics related to China.

The book not only traces the history of a city that has been the pilot city of the central government for the promotion of electromobility since 2009 and today claims to have more than 200,000 charging stations. With his processing of the fairytale-like rise of Shenzhen to a global model city, Wolfgang Hirn gives the reader an understanding of the following chapters, which deal with “the factory of the world”, the city in the rush of founders and examples of the Tencent and Ping An corporations like them develop their power with alogrithms.

Wolfgang Hirn introduces Shenzhen as a “Smart City”, loaded with electromobility that connects companies, companies that – instead of universities – shape the research landscape and where Nobel Prize winners want to run their research laboratories. However, if you think that “Shenzhen Valley” is all about money, Wolfgang Hirn will open your eyes to the art of building and the architects, artists and designers who create a city.

Finally, Wolfgang Hirn also shows the relationship between the two “difficult neighbors”: How Shenzhen is profiting from the decline of Hong Kong. Anyone who looks at the unprecedented rise of Shenzhen will reconsider whether the “Hong Kong democracy movement” is really about democracy, or perhaps also about a self-confidence that many Hong Kongers have disturbed: “The former British crown colony was bursting with self-confidence,” writes Wolfgang Hirn: Hong Kong looks like a museum today, suddenly looks old.

Who still remembers the “hidden champions” in Germany, German ingenuity? “In 2005, the following five companies worldwide had the most patent applications filed,” writes Wolfgang Hirn: “Philips, Panasonic, Siemens, Nokia and Bosch. So four Europeans – including two Germans – and one Japanese.” Anyone who knows today’s conditions, these words come across as from an old history book with stories from a forgotten time. “In 2018 none of these companies was among the top five. The order is now: Huawei, Mitsubishi Electric, Intel, Qualcomm and ZTE. There was no longer a European, instead two companies from Shenzhen.”

Instead of marveling at the “today” in California, in Silicon Valley, the gaze of politicians, business leaders and journalists who constantly look at extroverted billionaires of the so-called PayPal mafia (Elon Musk etc.) should focus on “tomorrow”, turn east and see the still unknown stars. “The ladies and gentlemen should change direction”, so the appeal of Wolfgang Hirn, who on the one hand was lucky to have seen China’s starting conditions in the 1980s and on the other hand had the foresight to return to China again and again to witness an unprecedented climb.

This rise of China is particularly concretized in the example of the model city, the reform laboratory “Shenzhen”, the city that is closer to Hong Kong than Frankfurt to Wiesbaden, closer than Cologne to Düsseldorf. “Shenzhen still benefits greatly from the fact that the surrounding area has the greatest density of factories in the world. I was able to see with my own eyes how this came about when I traveled to Shenzhen for the first time in the early 1990s,” writes Wolfgang Hirn.

Wolfgang Hirn analyzes the fundamental reforms on which the success was based: In agriculture, in private entrepreneurship, in the free labor market and the abolition of state prices. Against the background of developments in the West, especially in Europe, it becomes clear to the reader in which tragedy Europe and especially Germany is steering: more collectivization of agriculture, private companies on the drip of public contracts and subsidies, in detail state-regulated jobs and tariffs, prices manipulated by monetary and fiscal policy, etc., which lead to where China came from: waste of resources, queues, inefficiency, up to and including insufficient supply.

After Xi Jinping was elected in November 2021, his first eagerly awaited trip took him to Shenzhen to, among other things, visit Tencent and the Qinhai development zone – “without much pomp”, as Wolfgang Hirn reports and quotes the president: “China’s reform and opening-up policy will never stop. In the next 40 years, China will impress the world with further successes,” announced Xi Jinping.

Wolfgang Hirn shows the downsides that went along with the opening. In the shadow of Shenzhen, the megacity of Dongguan emerged “as the Mecca of the global shoe industry”. Dongguan was the filthy kid in the Pearl River Delta, a city that once had a bad reputation. “It was the capital of prostitution,” said Leslie C. Chang from her book “Factory Girls”. The China expert Wolfgang Hirn succeeds in showing the different phases of development and differentiated how the rise of China and especially of Shenzhen was not just characterized by good news, but rather the removal of grievances in one area was bought at the price of grievances in another. Unfortunately, the German state media often do not differentiate which grievances in China have been overcome, which have been added and which have been added but have already been overcome again. Anyone who reads Wolfgang Hirn book carefully will be able to form his own, more informed opinion.

The author succeeds in repeatedly speaking on two sides of the same thing, for example in the case of drones and the leading manufacturer in Shenzhen: “DJI estimates that a third of China’s agricultural area could be cultivated with drones. In XAircraft from nearby Guangzhou, founded by the former Microsoft manager Peng Bin, DJI has a serious competitor in this segment.” Wolfgang Hirn adds another use of drones that is still unimaginable for German readers: “And another important application area for drones was discovered in Shenzhen. The traffic police there have been using drones since 2016 to track down traffic offenders of all kinds – from high-speed drivers to parking offenders – from above. Obviously with success: every three minutes they would register irregular behavior with their drones, reports the police.”

“We will have to remember a new abbreviation. Three letters that will play an important role in the future: GBA “, writes Wolfgang Hirn and foresees a new center of power in the world: “Greater Bay Area.” It is about the merger of the two special administrative areas and former colonies of Hong Kong and Macau with nine cities in Guangdong Province.

Anyone who does not deal with Wolfgang Hirn‘s point of view will hardly understand ratings for countries, industries, cities and companies in the future. “The emerging countries, including the rest of China, see how growth can be accelerated through a clever industrial policy. And developed and even well-developed industrialized countries like Germany see how to promote high-tech industries, how to create an entrepreneurial spirit in a city, and how to pursue a consistent transport policy. “

Moody’s Heatmap Shows Heightened Environmental Credit Risk

Agencies, Criteria, Models, Read

Moody’s analysts have revised their environmental classification to reflect evolving environmental, social and governance standards, disclosure frameworks and market conventions among issuers and investors.

Environmental risks can arise from regulatory and policy issues, hazards or a combination of both. The five environmental categories Moody’s considers most material to credit are

  • carbon transition,
  • physical climate risks,
  • water management,
  • waste and pollution and
  • natural capital.

Moody’s identified these categories, which apply to both public and privatesector issuers, based on their alignment with evolving market standards and conventions.

These changes represent a reclassification and/or renaming of Moody’s previous environmental categories. The previous environmental categories were featured in an earlier, 2018 environmental heat map report. The analysts underline that it is not a change in the specific environmental issues being considered. It is important to understand that rating changes can result from changed criteria, models and weightings as well as from changed framework conditions and new data from the organizations to be assessed.

Each of the five categories has been cited as a material consideration in their rating actions. Environmental considerations are becoming more relevant to the credit quality of Moody’s rated issuers. Moody’s points out that environmental credit risk will continue to grow.

In their “sector in-depth” report “Heat map: Sectors with $3.4 trillion in debt face heightened environmental credit risk” Moody’s identifies sixteen sectors with $4.5 trillion in rated debt having very high or high inherent exposure to carbon transition risk. Eighteen sectors with $7.2 trillion of debt have high inherent exposure to physical climate risks and again eighteen sectors with $5.2 trillion in rated debt have very high or high inherent exposure to waste and pollution risk.

Eight sectors with $747 billion in debt face heightened inherent exposure to natural capital risk. Six sectors with $925 billion in debt have very high or high inherent exposure to water management risk, according to Moody’s.

ESG – Global: Heat map: Sectors with $3.4 trillion in debt face heightened environmental credit risk (53 pages).

S&P And Moody’s Are Losing Market Share in the EU

Agencies, Certifications, Read, Registrations, Regulations

For the first time, the European Securities and Markets Authority ESMA has reported a decline in market shares in Europe for both of the major US rating agencies. The authority thus discloses a remarkable development. Never before have the two market leaders, who have been issuing their credit ratings worldwide according to recognized standards and criteria for around 100 years, had to give up market shares in favor of agencies that have their headquarters in Europe.

In addition to European agencies, the winners include competitors of the two market leaders Standard & Poor’s and Moody’s in the USA, namely Fitch Ratings with a market share that has increased from 16.62% to 17.55%, and DBRS Ratings, with a market share of 2.46% which increased to 2.99%. The Canadian DBRS Ratings was taken over by Morningstar, a US rating agency that is the undisputed leader in the rating of mutual funds. The insurance specialist A.M. Best Rating Services could also increase its market share, from 0.82% to 0.95%. A.M. Best Rating Services shows, how the decades-long focus on the insurance industry pays off in order to be increasingly perceived in the market as a Credit Rating Agency (CRA). All five agencies named are controlled by parent companies in the United States.

According to the European Securities and Markets Authority ESMA, the largest rating agencies domiciled in Europe still do not each have a full percentage point market share of the European rating market. The largest rating agencies with roots in Europe are the Italian-based Cerved Rating Agency and The Economist Intelligence Unit, which belongs to the Economist Group in London. While the Italian agency, which also offers its services in the European Union, improved from 0.81% to 0.84%, The Economist Intelligence Unit suffered a market share loss from 0.87% to 0.79%. However, this should be understood against the background that The Economist Intelligence Unit shows a clear focus on micro and macroeconomic research and is known for country ratings, i.e. not for ratings for issues and issuers from the group of industrial companies, financial service providers – i.e. banks in particular and insurance companies – and does not compete in the rating of asset-backed securities, etc. The bottom line is that practically nothing has changed in the market shares of the two largest European agencies in the overall European market.

Among the five types of credit ratings distinguished by ESMA, The Economist Intelligence Unit only offers ratings in the “Sovereign and Public Finance” sector. In the other four market segments this agency does not compete with competitors within the European Union. A.M. Best Europe Rating Services achieves its market share only through the activities of this agency in the “Corporate Non-Financial” and “Corporate Financial” market segments (the latter includes the insurance industry). The market share of Cerved Rating Agency must also be analyzed against the background that this agency only reports ratings in the “Corporate Non-Financial” segment and is not in direct competition with other competitors in the other four market segments.

Remarkable changes – if you disregard the reduction in the market shares of S&P Global Ratings Europe and Moody’s Investors Service – there are only among the “further ran”. For example, a rating agency in Berlin superseded Creditreform Rating, ranking 8th. This is remarkable because Creditreform Rating, as a subsidiary of Creditreform AG in association with the Verband der Vereine Creditreform e.V. in Germany, has a very strong brand name and can rely on over 158,000 members of the association worldwide. While Creditreform Rating only has a market share of 0.53%, previously 0.55%, the Berliners now make it to 0.62%, previously 0.49%. This corresponds to a growth in market share of more than a fifth within a year. It remains, however, that of the agencies based in Germany, the one with the largest market share only occupies eighth place in the European Union.

In contrast to A.M. Best Europe Rating Services, Cerved Rating Agency, The Economist Intelligence Unit and Creditreform Rating, Berlin’s Scope Ratings accepts rating orders from any type of issuer, including in the “Corporate Insurance” market segment that is not served by Creditreform Rating, for example. Through so-called “rating shopping”, issuers look for the agency that is best able to serve their interests. If an agency does not even offer certain ratings, the rating agency concerned cannot benefit from this earnings effect from “rating shopping”.

In contrast to all other agencies, the Berlin agency sees itself as – quote – “the leading European provider of independent credit ratings” with a market share of 0.62%. This claim is due to the tireless work over the past 20 years, which was not discouraged by the bankruptcy of the previous agency FondScope, from which today’s agency Scope Ratings emerged. Over the past two decades, the agency has not yet been able to generate profits in any year, but annual deficits have accumulated. The permanent losses are borne by a small group of well-known personalities, financially strong institutional investors and strategically motivated shareholders of rated companies.

There are no really noticeable movements among the other agencies, if one also takes into account that some agencies have given up in the meantime and thus also have given up market share. The dynamic growth of Kroll Bond Rating Agency Europe deserves special mention, as the agency increased its market share tenfold from 0.03% to 0.34%. With this market share, Kroll Bond Rating Agency Europe is now the largest rating agency ahead of all the other 17 names in the last places in Europe.

If one measures the market share not in terms of the sales achieved, but in terms of the sheer number of financial instruments for which ratings were given, an even more differentiated picture emerges. The market shares in the “Structured Finance” segment, which is so important for rating agencies, have shifted significantly in favor of Scope Ratings: While the Berlin agency only achieved a market share of 1.2% in the previous year, it was up 1.5% in 2019, while Moody’s market share fell from 59.5% to just 55%. In this market, Fitch Ratings is in second place with 44.5% (after 45.0%), S&P with a slightly increased 37.5% (after 35.8%) and DBRS with 14.3% also better than before (13.9%). According to this statistic, the market shares do not add up to 100% since the same financial instruments can be assessed by several agencies.

Anyone who already has a rating from Moody’s or S&P can afford to add the rating of a lesser-known, local agency without having to expect any disadvantages when placing the bond, especially not if a smaller agency delivers an even more favorable credit rating. An example of this is given by the issuer Grenke, who received a long-term rating of BBB+ from Standard & Poor’s, but A from GBB Rating, domiciled in Germany.

According to Article 8d of the EU Regulation on Credit Rating Agencies, the European Securities and Markets Authority ESMA is only required to calculate the market shares of the rating agencies it supervises. Therefore, there is no information in the authority’s document on the absolute basis on which the figures were calculated. Since the market shares in the EU are only calculated on the basis of the figures that must be reported to ESMA, the relevant world market shares are actually considerably lower than the EU market shares calculated by the EU authority.

If, for example, the 57 Chinese rating agencies or even the more than 200 other rating agencies worldwide based outside Europe and with no activities in the European Union market were included in the calculation, the world market shares for the 27 agencies recorded in the EU in 2019 would naturally be considerably lower.

According to Section 267, the German Commercial Code describes the size classes of companies that are exempt from certain disclosure obligations. Small corporations are those that do not exceed at least two of these three criteria: total assets of € 6 million, sales of € 12 million in the twelve months prior to the reporting date or an annual average of fifty employees; medium-sized corporations are those that exceed at least two of the three characteristics specified in paragraph 1 and do not exceed at least two of the three following characteristics: € 20 million balance sheet total, € 40 million revenue in the twelve months before the reporting date or an annual average of two hundred and fifty employees.

The agencies based in Germany – even the ones describing themselves as “leading” – do not exceed these thresholds, so that, unlike the US agencies, they are not obliged to disclose their financial statements. From this fact it can be concluded that these German agencies are located at most in the range of one thousandth of the sales volume of the market leaders S&P Global and Moody’s, especially since the German agencies – unlike the US American giants – are almost unknown in Africa, Asia and America. Moody’s, for example, has a global presence with more than 11,400 employees in 33 offices around the world and serves customers in more than 100 countries.

Moody’s Corporation recorded TTM (Trailing Twelve Months) sales of US $ 5.3 billion in the third quarter of 2020 with an operating profit margin of around 45%. S&P Global achieved even higher total sales, with a large part being generated by services beyond credit rating services. For example, S&P has secured market dominance by taking over IHS Markit for US $ 44 billion. All agencies established in Europe are far from being able to participate in these business arenas, which are important for institutional investors as well as for public and private issuers. Moody’s secured e.g. In 2017, with the takeover of Bureau van Dijk, information on around 375 million companies, so Moody’s can be considered the most important point of contact for company data.

In this respect, S&P Global Ratings with a market share of 40.40% in the EU alone (previously 42.09%) and Moody’s Investor Service with a market share of 33.12% (previously 33.39%) are unlikely to see the market share gains of the small agencies as a dangerous “game changer”, even if Scope Ratings has already collected data on hundreds of companies and has formed its own opinions on many issuers. Especially since these rating classifications from the Berlin agency hardly differ – if available – from the ratings of the market leaders, there is no disruptive effect and no reason for investors to concern themselves with these ratings. More than 70% of all sales in the recognized ratings business in the European Union remain on the books of Moody’s and S&P, and if you add Fitch Ratings, more than 90% of all payments from Europe go to these three US agencies alone .

Hardly any professional investor knows to enumerate smaller rating agencies supervised by ESMA, let alone report on their current ratings. In the practice of the financial markets, most of these small agencies really do not play any role. With a combined market share of more than 90%, the importance and role of the three leading US agencies S&P, Moody’s and Fitch Ratings are therefore still significantly underestimated, because the sales do not reflect the interests of investors, who mainly rely on the opinions of these experienced rating agencies. If a smaller credit rating agency is commissioned by an issuer to develop and disseminate a rating, this says nothing about the effectiveness of this mandate. Because of the small number of ratings issued, there is no statistical, scientifically based evidence that ratings from these small agencies bring the assessed issuer a significant cost advantage.

Since the fees charged to rating agencies by the European Securities and Markets Authority are calculated based on their business volume, the leading US agencies have an interest to report low sales volumes to ESMA. Thus their market shares in the EU appear as low as possible. Additional fees for other services are charged by their other subsidiaries. Accordingly, the market shares of the smallest agencies are overestimated, because they are not burdened with proportionally higher administrative fees from their supervisory authority when reporting higher sales. This is due to the fee table applicable to the smaller agencies. In addition, the mini-agencies have an interest in being reported with high market shares to comfort their partners or shareholders, who are plagued by ongoing losses of their rating enterprise.

The highly complex EU regulation of rating agencies, which was launched in 2009 with the aim of breaking the US oligopoly, has not changed the fact that only the leading agencies provide issuers with the required “entry ticket” to the world financial markets. Nothing has changed in their dominance – on the contrary: the market share of these three agencies, S&P, Moody’s and Fitch Ratings, was 87.02% in 2012, and now is 91.07%, even higher than it was when politicians in Europe believed that the opportunity of the financial crisis could be used to restrict the power of US credit rating agencies. After a lost decade, it is time to think about deregulation and finally to abolish the privileges granted to all agencies registered or certified in the EU.

adult african american people black women business

Screen Applicants Faster


With the Talent Report™ Select All solution, Equifax (NYSE: EFX) facilitates faster, more-informed hiring decisions for talent acquisition professionals with reliable verifications of employment via The Work Number® database. Talent Report Select All delivers contextual data in support of a more holistic view of the candidate in a single report, helping hiring managers make critical decisions with greater confidence.

“Customers tell us they need to quickly and efficiently verify current and past employment,” commented Joe Muchnick, SVP of Talent Solutions for Equifax. “Typically, in one, simple request Talent Report Select All delivers the data employers need instantly and consistently which helps put efficiency into a critical piece of their hiring process.”

A background check is information which is compiled on an individual which may be considered when determining eligibility for a job or housing. An employer or property manager determines what components to include in the background check based on the industry, position or housing unit. In general, the components may include: criminal history information, civil records, driver records, employment records, educational information, license verification, credit information and reference checks. Background checks may also include drug testing, a physical, and even psychological evaluations or assessments. In order to determine which components may be included in a background check, applicants are encouraged to consult with their prospective employers and property managers.

Today’s employers continue to refine their processes for making educated hiring decisions, and are constantly looking to improve efficiency and the quality of hires. As a result, background screening and employment verifications are on the rise. In fact, a 2020 survey released by HR research Institute and the Professional Background Screening Association (PBSA) found that 94 percent of employers are conducting at least one type of employment background screening. The same survey showed employment verifications are up 17 percent from 2019 to 2020. Founded as a non-profit trade association in 2003, the PBSA was established to represent the interest of companies offering employment and tenant background screening services.

Through Talent Report Select All, recruiting teams and background screeners with permissible purpose have access to nearly 400 million employment records in The Work Number database. Record growth in The Work Number database has increased more than 43 percent since 2016, and includes hundreds of thousands of small- to medium-sized businesses as well as many contractor (1099) records, supporting a more holistic view of the candidate.

The scale of the database and the sophisticated underlying technology platform helps drive digital efficiency into a formerly manual process. With a single report that returns all available data in typically milliseconds, credentialed verifiers can reduce workloads and improve decision speed. That scale can also help deliver unparalleled results. In fact, on average Talent Report Select All delivers more than 4 instant verifications of employment with each verification request. That means it helps employers and background screeners confirm a candidate’s past work history and current job status quicker, resolve inconsistencies with self-reported information, and validate experience.

In addition to confirming employment history, pre-employment verifications can also help businesses guide interviews based on insights from employment histories. A (pre-pandemic) Equifax study of pre-employment data for a large national restaurant chain found that nearly one-quarter of their new hires were concurrently holding another job. That is significantly above the January 2020 national average of 5.1 percent, as tracked by the Bureau of Labor Statistics. Such information can be confirmed through pre-employment verifications and can help hiring managers guide conversations around scheduling needs, in the hopes of attracting the best candidates and increasing retention by offering a workable schedule.

The background screening profession serves several critical functions, including: protecting the rights of consumers, promoting safe homes and workplaces, helping employers and property managers comply with state and federal screening regulations, helping public and private employers make informed placement decisions and last not least providing risk mitigation tools for employers and property managers.

Toward A Reputation State: A Comprehensive View of China’s Social Credit System Project

Governance, Read

China’s Social Credit System Project (the “SCSP”) is one of the most misunderstood recent developments in China’s law and policy. In the book “Social Credit Rating“, Xin Dai offers a comprehensive conceptual thesis that explains the SCSP as the Chinese government’s multi-faceted strategy to use reputation in law and governance.

The SCSP envisions that reputation mechanisms such as blacklisting, rating, and scoring be used to tackle a range of the country’s intractable governance problems in its social and economic realms. “While knowing no apparent equivalent elsewhere in the world,” Xin Dai points out, “the SCSP portends the rise of the “reputation state” on a wider scale, as government authorities outside of China will also increasingly seek to use reputation mechanisms and technologies in the spheres of law and governance. And as it both raises high hopes and stokes grave fears, the SCSP has so far been shaped and limited by the institutional and market forces that animate it in the first place.”

Xin Dai is associate professor (tenured) at Peking University Law School. His primary areas of research interests include legal theories, law and economics, information privacy, internet law, and digital governance. He received his LL.B from Peking University, J.D from Duke University, and J.S.D from the University of Chicago. Xin practiced corporate and securities laws with Shearman & Sterling’s New York and Hong Kong offices, and taught previously at Ocean University of China Law School where he served as an associate dean.

2020 Becomes the First Year of Digital Currency

News, Read

From October 8th to 18th, 2020, Luohu District, Shenzhen, China, conducted a digital currency experiment, issuing digital currency red envelopes totaling 10 million RMB (approximately 1.5 million Dollars). From the 8th to the 11th October, 1,913,800 Shenzhen residents reserved a lottery for red envelopes, and 50,000 of them received digital RMB red envelopes, each at 200 yuan (about 30$). A bank from the four major banks (ICBC, Agricultural Bank of China, Bank of China, China Construction Bank) should be chosen as the bank to receive the red envelope. Different banks have different colors of digital RMB.

After downloading the “Digital RMB App”, the digital currency in the red envelope can be spent no threshold at 3,389 merchants in Luohu District, Shenzhen, within seven days from the 12th to the 18th October. Red envelopes can only be consumed, and cannot be transferred or exchanged. The red envelopes that have not been used before 24:00 on October 18 will be retaken by the digital RMB system.

Since 2014, the digital currency technology has been developed, internally tested, and improved in the central bank of China. This digital currency red envelope experiment is the first large-scale contact between the central bank’s digital currency and ordinary citizens and merchants. It is supposed to collect data for further large-scale implementation.

This is a landmark, marking the official landing of the central bank’s digital currency, and 2020 officially becomes the first year of digital currency. The essence of currency is credit. Credit is the foundation of human exchange, division of labor, and technological progress. Human beings have gone through the era of commodity credit and national credit, and will enter the era of technological credit in 2020.