sign in sign up
<<
Home , Alexander Dobrindt, Andreas Scheuer, Brigitte Zypries, Bruno Hollnagel, Georg Fahrenschon, Heiko Maas

Report of the Board of Supervisory Directors

Meetings of the Board of Supervisory Directors The Board of Supervisory Directors and its committees con- stantly monitored the conduct of KfW’s business activities and the management of its assets. It has taken the necessary decisions on the provision of financing and the conduct of other business in accordance with the conditions set forth in the KfW Law and Bylaws. The Board of Supervisory Directors and the Audit Committee each met three times in 2017 for this purpose; the Presidial and Nomination Committee five times, the Remuneration Committee four times and the Risk and Credit Committee seven times.

Peter Altmaier, Federal Minister for Economic Affairs and Energy At the meetings, the Board of Supervisory Directors acknow­­ ledged the information provided by the Executive Board on – KfW’s 2016 annual and consolidated financial statements, – the business activities and current developments in each of KfW’s business sectors, including KFW IPEX-Bank GmbH and DEG, – the group’s net assets, earnings position and risk situation in general, particularly sensitive areas such as the ship port- folio, as well as political risks, including any implications of the ’s decision to leave the EU, – the significance of digitalisation for KfW and its activities to harness the arising opportunities, – banking supervisory issues relating to KfW, current consulta- tions with the banking supervisory authorities, in particular on compliance with regulatory capital requirements, audits completed and ongoing, the resulting measures, as well as potential effects of future regulatory changes, – the current status of the major projects portfolio, particularly concerning the progress in renewing the financial architecture (including the “SAPFin project”), – the modernisation and reorientation of the IT landscape, as well as improvement measures relating to payment trans­ actions given the deficits identified in these areas, – business and risk strategies, the group IT strategy, and KfW’s IT strategy for 2018.

The Board of Supervisory Directors approved the establishment of a subsidiary for the purpose of stepping up KfW’s activities in the area of venture capital and equity financing. By expand- ing domestic equity financing, KfW is supposed to make a substantial contribution to reducing the shortage in supply of follow-on and growth financing in the start-up and growth phases using funds from the ERP Special Fund.

In addition, the Board of Supervisory Directors addressed the following key issues at its meetings based on the reports submitted by the Executive Board on the individual business sectors:

KfW Financial Report 2017 Report of the Board of Supervisory Directors | 17 – With regard to domestic promotional business, the Board of Members of the Board of Supervisory Directors attended three Supervisory Directors discussed the reorganisation of the training events and three individual training sessions in 2017 promotional area, taking a detailed look at the expansion of to gain and maintain the expertise required in accordance with equity financing, the commitment in environmental and the German Banking Act. A training session was also conducted climate protection, as well as energy efficiency, and continued for employees reporting to members of the Board of Super­ development of innovation promotion relating to digitalisation. visory Directors. – With regard to the business sector Promotion of developing countries and emerging economies, the Board of Supervisory Committees of the Board of Supervisory Directors Directors discussed key issues of Financial Cooperation, the In exercising its responsibilities prescribed in the Bylaws, the planned expansion of German development cooperation using Presidial and Nomination Committee discussed Executive additional federal budget funds, crisis and refugee aid, the Board matters and made recommendations to the Board of implementation of the Federal Government’s Africa initiatives, Supervisory Directors on the appointment/reappointment of the initiatives relating to climate protection, as well as DEG’s Prof. Dr Joachim Nagel and Dr Hengster, and on the appoint- business orientation and results. ment of Dr Günther Bräunig as Deputy Chief Executive Officer/ – As for KfW IPEX­-Bank GmbH, i.e. the Export and project Chief Executive Officer of KfW. The decision to have an Execu- finance business sector, the focus was on the support the tive Board position responsible exclusively for IT in the future bank provides to German and European investors and was also discussed. It was also informed of banking supervisory exporters. The future strategic focus, capital resources and issues and about KfW Stiftung. It discussed the status of major business results of KfW IPEX-Bank GmbH were also discussed. projects and the optimisation of KfW’s payment transaction – The Board of Supervisory Directors received regular reports systems with the Executive Board. The committee made a recom- on capital market development and KfW’s funding status. mendation to the Board of Supervisory Directors on the estab- KfW is still playing a leading role in the rapidly-growing green lishment of a subsidiary for the purpose of stepping up KfW’s bond market, and making a key contribution to the develop- activities in the area of venture capital and equity financing. It ment of the “sustainable finance” market segment. conducted an evaluation of KfW’s executive bodies, making – The Board of Supervisory Directors also monitored KfW Group’s relevant recommendations to the Board of Supervisory Direc- environmental and sustainability commitment. tors. It was also informed about legal disputes and construction projects. The Board of Supervisory Directors was informed at the meet- ings as well as quarterly, in writing, of the group’s net assets, The Risk and Credit Committee reviewed the commitments, earnings position and risk situation, the development of its pro- equity investments, and loans to members of senior management motional business, and Internal Auditing’s activity. The Executive that must be presented to it under the KfW Law and KfW Bylaws, Board also kept the Chair of the Board of Supervisory Directors/ as well as the scope for funding required by KfW for its funding, his deputy informed of key developments at the bank between and the related swap transactions necessary for hedging, and meetings. addressed the risk situation and the effectiveness of the risk management system. It also dealt with KfW’s exposure in differ- The Board of Supervisory Directors discussed the focus areas ent countries and regions, the development and assessment of of the business strategy – particularly in the fields of climate political risks, including the United Kingdom’s decision to leave change and the environment, globalisation, innovation and the EU, the ODA recognition system, the reorganisation of SMEs – including KfW’s activities in Europe. The Board of Super- equity finance, the potential effects of regulatory measures cur- visory Directors approved the planning for 2018, and acknow­ rently under discussion, as well as the risk profile of the business ledged the multi-year business strategy, the risk strategy and the sector Export and project finance. The results of Bundesbank IT strategies for the group and the individual group companies. assessments, along with the resulting measures and projects, the talks with the German Federal Financial Supervisory Author- Each member of the Board of Supervisory Directors is obliged ity (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin”) to inform the Chair of the Board of Supervisory Directors or of and the regulatory capital requirements on KfW were also the relevant committee about potential conflicts of interest reported and discussed. And lastly, the committee discussed the before a resolution is made. Consequently, on some occasions initial risk-relevant results of the 2017 annual audit and the during the reporting year, members of the Risk and Credit Com- risk strategy, including the capital planning for the next few mittee abstained from voting or refrained from participating financial years. in resolutions. The Audit Committee addressed the accounting process, KfW’s Ten members of the Board of Supervisory Directors attended net assets and earnings position, the reports by Internal Audit- fewer than half of the board meetings in the reporting year. ing and Compliance and the annual financial statements of One member attended fewer than half of the meetings of the KfW Group 2016. It made corresponding recommendations to Presidial and Nomination Committee. The same applies to the the Board of Supervisory Directors for the approval of the Remuneration Committee and the Audit Committee. Two mem- annual financial statements 2016 and the appointment of the bers attended fewer than half of the meetings of the Risk and auditor for 2018. Based on information supplied by the Execu- Credit Committee. tive Board, it evaluated the efficiency of the risk management

18 | KfW Financial Report 2017 Report of the Board of Supervisory Directors system, the internal control system (ICS) and the internal audit Sitzmann and . , Anton F. Börner, system. In addition, it addressed auditor independence, set Hans-Dieter Brenner, , , focal points for the 2017 annual audit and discussed the initial Dr Markus Kerber, Dr Gesine Lötzsch, Dr Wolfgang Schäuble, results of the 2017 annual audit (audit report part I). The Com- Andreas Schmitz, Peter-Jürgen Schneider, Dr Frank-Walter mittee approved the audit plan of the Internal Auditing depart- Steinmeier, Prof. Dr Georg Unland and Dr Norbert Walter-Borjans ment for 2018. It was informed of banking supervisory issues, stepped down from the Board of Supervisory Directors in in particular the Bundesbank assessments, along with the 2017. Robert Feiger, Reiner Hoffmann, Stefan Körzell and resulting measures and projects, as well as the ongoing major Dr Joachim Lang stepped down with effect from 31 Decem- projects and used several meetings to take a close look at a ber 2017 and were reappointed according to schedule with payment transaction incident, therefore commissioned a special effect from 1 January 2018. investigation to be conducted by an auditor, and discussed the plan of action developed by KfW and the auditor for KfW’s New members of the Board of Supervisory Directors with effect payment transaction systems and their optimisation in detail. from 1 January 2018 are Dr Hans-Walter Peters, Dr Johannes- Jörg Riegler and Helmut Schleweis, with Reinhold Hilbers joining The Remuneration Committee discussed compensation with effect from 2 February 2018, Dr and issues and the implementation of the Remuneration Regulation Dr Florion Toncar with effect from 1 March 2018, Dr Matthias for Institutions (Institutsvergütungsverordnung – “IVV”) as of Haß with effect from 2 March 2018, as well as Julia Klöckner, 2018. It was informed, among other matters, about the remu- , , and neration system for KfW employees and its future structure, with effect from 14 March 2018. , , including the new target agreement and assessment system, as Dr Barbara Hendricks, Christian Schmidt and Brigitte Zypries well as the risk analysis to identify risk takers. As part of this stepped down from the Board of Supervisory Directors effective risk analysis, KfW, both as an individual institution and at group 14 March 2018. The Board of Supervisory Directors would like level, has to identify staff members whose work could have a to thank the members who stepped down in 2017 and 2018 material impact on the risk profile of the institution/of the for their work. group. The group-wide remuneration strategy was also dis- cussed. Annual financial statements Ernst & Young GmbH, which was appointed auditor for the 2017 The committee chairpersons reported to the Board of Super­ financial year, has audited the annual financial statements and visory Directors regularly on the work of the committees. the management report of KfW as well as the consolidated financial statements and the group management report of Changes on the boards KfW Group, all of which were prepared as of 31 December 2017 During the reporting period, the Board of Supervisory Directors by the Executive Board, and issued an unqualified auditor’s appointed Prof. Dr Joachim Nagel as a new member of the report thereon. The financial statements and the management Executive Board with effect from 1 November 2017, and reap- report were prepared in accordance with the provisions of the pointed Dr Ingrid Hengster to the Executive Board with effect German Commercial Code (HGB) and the consolidated financial from 1 April 2018. Dr Norbert Kloppenburg retired on 31 Octo- statements and the group management report were prepared ber 2017 and Dr Ulrich Schröder retired at his own request on in accordance with International Financial Reporting Standards 31 December 2017; both have therefore stepped down from the (IFRS) as applicable within the . Executive Board. Dr Günther Bräunig was appointed Deputy Chief Executive Officer with effect from 1 September 2017 and At its meeting on 11 April 2018, the Board of Supervisory Chief Executive Officer of KfW with effect from 1 January 2018. Directors approved the financial statements and the consolidated The Board of Supervisory Directors would like to thank financial statements, both of which were prepared by the Dr Kloppenburg for 28 years of committed service to KfW. Executive Board, as stipulated in Article 9 (2) of the KfW Law, Dr Schröder died on 25 March 2018 at the age of 66, following following a recommendation by the Audit Committee. a serious illness. Dr Schröder always applied a great deal of energy, discipline and care in his work for the good of KfW. Frankfurt am Main, 11 April 2018 The Board of Supervisory Directors is grateful for his almost nine years of commitment as Chief Executive Officer. THE BOARD OF SUPERVISORY DIRECTORS

In accordance with Article 7 (1) no. 1 of the KfW Law, the Federal Minister for Economic Affairs and Energy at the time, Brigitte Zypries, as of 1 January 2018 assumed the position of Chair of the Board of Supervisory Directors from me in my former Chair capacity as Federal Minister of Finance.

New members of the Board of Supervisory Directors in 2017 were Dr Holger Bingmann, Volker Bouffier, Dr Louis Hagen, Andreas Ibel, Dr Joachim Lang, Lutz Lienenkämper, Edith

KfW Financial Report 2017 Report of the Board of Supervisory Directors | 19