Most supervisory news in Germany is about adding a rule. This is about removing several thousand of them — for almost every bank in the country at once.
At a joint digital briefing on 5 February 2026, attended by more than 5,000 people from banking and supervision, BaFin and the Bundesbank set out how far they intend to take regulatory relief (Deutsche Bundesbank). The headline number is the one to hold onto. Under the planned ninth amendment to the MaRisk — the minimum requirements for risk management that govern how German banks run themselves — around 85% of institutions will be able to use simplifications, against roughly 10% today (9th MaRisk overview).
That is not a tweak to proportionality. It is a redefinition of who supervision is built for.
Proportionality has always existed in European banking supervision: the idea that a small regional savings bank should not face the same compliance load as a globally systemic one. But in practice it has been the exception. The default framework was written for the complex institutions, and a narrow band of the smallest banks could apply for relief. Roughly one in ten benefited.
The ninth MaRisk amendment inverts that. Simplification becomes the setting most banks operate in, and full complexity becomes the carve-out for the institutions whose size or risk profile demands it. BaFin frames the wider shift as a move “away from rigid checklists and towards supervision based on principles” — judgement over box-ticking (BaFin briefing summary). Alongside it sits a “small banking regime,” in which small, non-complex institutions that opt in receive structural relief, and a parallel BaFin-Bundesbank initiative to reduce the complexity of the European capital-stack rules (Deutsche Bundesbank symposium 2026).
The motivation is openly stated and politically current: competitiveness. German and European supervisors have absorbed the argument that the post-2008 compliance build-up now weighs on the banks meant to fund the economy, and the 2026 agenda — across BaFin, the Bundesbank and Brussels — is to take weight off (Bundesbank, “Reducing complexity, preserving stability”). On its own terms, the case is strong. A €2 billion local bank running a vanilla deposit-and-lending book does not need the internal-model apparatus of a cross-border institution, and the cost of pretending it does is real.
Here is the tension the briefing did not dwell on. While the relief widens to 85% of institutions, the supervisors’ own statement of where the danger lies did not soften. The 2026 risk-oriented audit programme keeps three priorities at the front: credit risk, property exposures and IT security (BaFin briefing summary).
Those are not abstract categories. Credit risk and commercial-property exposure are precisely where small and mid-sized German banks — the Sparkassen, the cooperative banks, the regional lenders — carry their concentration. A local savings bank’s book is, to a first approximation, local mortgages, local SME loans and local commercial real estate. That is the segment now moving into the simplified regime. And it is the segment carrying the exact exposures the supervisors say they are most worried about.
So the two halves of the 2026 agenda point at the same banks from opposite directions. The proportionality reform says: these institutions are simple enough that we can supervise them with a lighter touch and less granular reporting. The risk programme says: credit and property risk, which these institutions hold in concentrated form, are our top concern. Both can be true. But reconciling them requires that “simplification” never quietly becomes “less visibility into the exposures we just named as the priority.”
The honest version of this reform is that proportionality is supposed to remove procedural burden — the checklists, the duplicated reports, the model documentation a small bank never needed — without removing informational substance on the risks that actually move a small bank’s solvency. A near-commodity mortgage book is operationally simple and financially dangerous at the same time: simple to run, exposed to a single property cycle. Relief on the first must not become blindness on the second.
That is the line BaFin and the Bundesbank now have to hold, and it is harder than the briefing’s framing suggests. Reporting frequency is being reduced “in a risk-oriented manner,” and the large set of separate returns is to be consolidated. Done well, that gives supervisors the same picture with less noise. Done carelessly, it thins the data on local credit and property risk just as a property cycle would make that data most valuable — and the next regional-property stress in Germany would arrive against a supervisory dataset deliberately made coarser the year before.
For Germany’s smaller banks, the relief is genuine and overdue, and most will feel it as lower cost rather than lower scrutiny. For BaFin and the Bundesbank, the reform sets a standard they will be judged against later: whether a supervision regime that lightened the load on 85% of institutions still saw the credit and property risk it had publicly ranked as its top concern. The figure that defines this reform is the 85%. The figure that will define whether it worked is how much the supervisors still know about the same banks when the next downturn tests the book they just simplified.