Germany’s financial watchdog BaFin has instructed the local arm of Standard Chartered to address organisational shortcomings and maintain an additional capital buffer after supervisors found the bank was not fully compliant in parts of its internal “business organisation.” The measures were announced on Dec. 16, 2025 and follow a supervisory review carried out earlier this year, according to Reuters.
The order applies to Standard Chartered Bank AG, the group’s Germany-based entity headquartered in Frankfurt am Main, which is central to the London-headquartered bank’s European presence. BaFin said the institution must remedy the deficiencies within the timeframe set by the regulator and hold more capital until the weaknesses are corrected.
Audit Findings On Lending And Risk Frameworks
BaFin said a special audit in the first quarter of 2025 concluded that the bank’s organisational setup was not properly organised in some of the areas examined, with shortcomings affecting two core functions: processes for granting loans and the framework used for determining risk-bearing capacity.
While the watchdog did not publish a detailed list of deficiencies in the Reuters account, the focus areas point to controls that underpin a bank’s risk governance. Lending processes can cover credit analysis, delegated approval authorities, documentation standards, and internal checks meant to ensure decisions align with policies and supervisory expectations. Risk-bearing capacity, meanwhile, refers to the methods a bank uses to judge whether its financial resources can absorb losses, including in adverse scenarios and in stress tests.
The FX News Group summary of BaFin’s action said the regulator linked the intervention to provisions of Germany’s Banking Act (KWG) and cited Section 25a as the framework governing requirements for a “proper business organisation,” including appropriate and effective risk management.
What The Measures Mean For The Bank
Standard Chartered said it was taking the supervisory findings seriously and cooperating with BaFin. The bank added that it had already implemented corrective steps and was working to complete all remediation within the deadline set by the regulator.
Orders of this type typically translate into structured remediation programmes: tightening internal procedures, strengthening oversight and control functions, refining escalation and approval pathways, and improving how decisions and risk assessments are documented and reviewed. The additional capital requirement is designed to give supervisors comfort that the institution has a larger cushion while governance and risk controls are being brought into line with standards.
The FX News Group account said the measures became legally binding on Nov. 30, 2025 and Dec. 6, 2025, suggesting the supervisory process began before the public notice and that the capital add-on applies until BaFin is satisfied the organisational issues have been resolved. BaFin did not disclose the size of the add-on.
Neither BaFin nor the bank indicated whether the action would affect client services, product offerings, or the unit’s strategic role. Still, the regulator’s emphasis on lending and risk capacity signals a push for system-level improvements rather than isolated fixes.
Wider Context In German Bank Supervision
The announcement comes as European regulators continue to press banks to reinforce governance, risk management, and compliance controls, using targeted audits and capital add-ons as corrective tools. In Germany, BaFin has recently taken comparable steps at other financial institutions, including imposing stricter oversight and additional requirements when it identified serious shortcomings.
For Standard Chartered, the latest intervention also follows earlier regulatory attention on its German operations. In 2022, Reuters reported that BaFin ordered Standard Chartered to hold more capital after identifying organisational flaws, highlighting that the regulator has been monitoring the unit’s control framework for several years.
This week’s order does not allege wrongdoing or customer harm. Instead, it reflects a supervisory judgement that key control processes did not meet expectations and that the bank must demonstrate durable improvements. The immediate next milestones will be completion of the remediation plan within BaFin’s deadline and the eventual removal of the extra capital requirement once supervisors conclude that the organisational standards are being met.
